Varadkar wants 9% tourism VAT rate to be retained in budget

Minister for Tourism Leo Varadkar has been lobbying for the 9 per cent rate for tourism related goods and services to be retained in the next budget, he said today.

The measure was introduced as a temporary measure in 2011 by the Minister for Finance Michael Noonan to give a boost to the labour-intensive tourism industry and related services such as restaurants, cinemas, hairdressers, sport facilities and publications.

Mr Varadkar told the launch of a review into the future of the Irish tourism industry this morning that he and the junior minister with responsibility for tourism, Michael Ring, had been "fighting the good fight" in relation to retaining the 9 per cent rate which had been reduced by 50 per cent from 13.5 per cent.

However he stressed that it was introduced as a temporary measure and paid for by a levy on pension schemes. It was estimated to cost the exchequer €350 million in a single year. He said there was a cost in its retention but withdrawing it too soon could “do real harm”.

Mr Ring said he had already met Mr Noonan in relation to the issue of retaining the 9 per cent. “This is working, this is positive and it should be left as it is,” he said.

Mr Ring warned that many hoteliers had already sent out their packages for 2014 with the 9 per cent VAT rate included.

Paul Carty, the manager of the Guinness Storehouse, one of Ireland's biggest tourism attractions, said the VAT rate had helped create 10,000 new jobs and had made the Irish tourism industry "vast more competitive".

Though tourism numbers have been good this year, he said the numbers are still 1.8 million down from the peak of 2007. Getting back to those figures would generate €1 billion in revenue and create 50,000 jobs, he said.

Speaking at the launch this morning Mr Varadkar said the tourism industry had been a real “success story” since 2010 with visitors up from January to July 2013 by 18 per cent in comparison with the same period three years ago.

Fáilte Ireland chief executive Shaun Quinn said the digital world had transformed the tourism industry since the last review was carried out in 2003.

Visitors were now getting their information much more from fellow travellers though websites than they were from tourism offices, he suggested.

Mr Quinn also said the idea of a Gathering Part II, which had been suggested by some in the industry, was misplaced.

Though the Gathering has been a success, he said it was an “innovative idea of its time”, but it was time for new ideas and not to look at the same ideas repackaged”.

The public has been asked to contribute submissions to the tourism strategy by November 1st. Among the issues being examined include tourism marketing, tourism product development, competitiveness and training. Those who wish to make a submission can contact the tourism policy review at tourismpolicy@dttas.ie .