Hospitality industry urges retention of 9 per cent VAT rate

Drinks and hospitality industry representatives have urged the Government to retain the special 9 per cent VAT rate on their services in the Budget and to reverse last year’s increase in excise duty on alcohol.

Publishing a report on the drinks industry, the Drinks Industry Group of Ireland (DIGI) said overseas visitors spent some 21 per cent of their total holiday expenditure on food and drinks in 2013.

Author of the report, economist Tony Foley of DCU Business School, said his key findings included that the experience of the Irish pub was the top-ranked item influencing overseas visitors to come to Ireland.

“The economic role of tourism is substantial. Recent improved tourism performance has contributed to the economic recovery,” Mr Foley said.

“The 2014 Government draft tourism policy includes very ambitious growth targets for tourism to increase the take to €5 billion in real terms compared to the level of €3.3 billion in 2013. Hospitality and drinks industry support will contribute to the realisation of the ambitious tourism growth targets.”

Mr Foley said most of the data in the report was drawn from sources such as the Revenue Commissioners, the Central Statistics Office and Fáilte Ireland.

The report was not saying the drinks industry “caused” tourists to come to Ireland, but the data was not available to identify precisely what percentage of tourism spend it was responsible for. But he said his findings did establish there was a fundamental association between tourism and the drinks industry.

The report noted the contribution of the drinks industry to a huge number of festivals and sports events.

But, it also stated there was “insufficient data to quantify the tourism volume directly related to the drinks industry”.

“Even in the absence of this direct quantitative link, it is clear from the empirical data presented in this report that the drinks industry is associated with a substantial contribution to tourism activity.”

It noted the tax take from tourism last year was €1.4 billion and that spending from domestic and overseas tourism was €4.7 billion.