VAT Row as UK Tourists Flock to Republic of Ireland
The UK Government is coming under renewed pressure from leading operators in the tourist industry following a remarkable turnaround in visitor numbers to the Republic of Ireland.
The latest figures show that 1.77 million visitors flocked to the Emerald Isle between March and May this year. And of these, 726,000 were from the UK – an increase of almost six per cent over last year.
Soaring visitor numbers across the Irish Sea follow an adjustment in the VAT rate for holidays from 13.5 per cent to nine per cent. This has also had the added advantage of creating 10,000 new jobs in the industry and 3,000 in the supply chain.
Now a growing number of disgruntled operators in the UK are demanding similar assistance to ease the slump in the British travel market. The UK’s 20 per cent VAT rate, among the highest in Europe, is adding hundreds of pounds to the average family holiday in the UK and forcing more and more operators to leave the industry.
The reason for the turnaround in Irish fortunes was explained by Michael Vaughan, President of the Irish Hotels Federation: “The government’s decision to reduce VAT, albeit by a small percentage in July 2011, has provided a vital stimulus for hotels and guesthouses.”
The news comes at the same time as the Cut Tourism VAT campaign to rally support in key UK tourism destinations to call for the implementation of a reduced VAT rate for the sector.
Graham Wason, Chairman of the Cut Tourism VAT campaign said: “These latest figures clearly show the positive impact that a reduced rate of tourism VAT can have on the economy. Whilst the UK tourism sector struggles under a 20% rate, the Republic of Ireland has taken advantage of a lower rate to increase its visitor numbers and new jobs. Hard-working British families have to look to get the most value from every holiday pound they spend, and the UK’s high tourism VAT encourages them to take a break abroad in Ireland, France or elsewhere in Europe.”
Janice Gault, Chief Executive of the Northern Ireland Hotels Federation said: “The lower rate of tourism VAT in the Republic of Ireland is a particular challenge for hotels in Northern Ireland. Our hotels offer excellent quality and value for money, but we struggle to compete against hotels on the other side of the border which charge less than half the UK rate of VAT for visitor accommodation. The UK Government needs to recognise the value of our industry and help us compete on a level-playing field within Europe.”
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