ANY EXTENSION of the special VAT reduction for Ireland’s tourism and hospitality sectors would be difficult to fund, Minister for Tourism Leo Varadkar has said.
The VAT rate was lowered from 13.5 per cent to 9 per cent in July 2011 as part of the Government’s jobs initiative. The temporary measure was implemented to stimulate the struggling sectors and is due to run out in December.
It reduces the cost of a range of items such as restaurant meals, cinema tickets, haircuts and accommodation.
Mr Varadkar told delegates at the Irish Hotels Federation annual conference in Kilkenny yesterday that the measure cost the exchequer €110 million to €130 million a year, “which is a lot of money”.
“That has to be worked out in the context of the next budget as to whether we have that kind of space,” he said.
Mr Varadkar said the Government would be assessing “how well tax returns actually perform in other areas in the context of the next budget”.
In a question-and-answer session, Mr Varadkar also advised the federation that asking for the extension of the measure because the industry was struggling may not be enough to ensure its continuance.
He said the most powerful arguments to Government would be that the measure had actually created jobs and he was not sure this was the case.
However, Mr Varadkar said there was good news with the allocation of €3.4 million in Fáilte Ireland funding for a series of high-profile international tourism and sports events.
Mr Varadkar said each event had potential to attract many thousands of international visitors to Ireland and support jobs in the hospitality sector.
Remarking that one job was created for every 60 extra visitors to Ireland, Mr Varadkar said the events “will showcase Ireland around the world, beaming positive images into millions of living rooms. Our goal is to convert these viewers into visitors to Ireland, and use the events to ensure that Ireland features on travel itineraries.”
However, hotels federation president Paul Gallagher said the VAT assistance from Government had been a much-needed boost for the sector and 6,000 jobs were created in the industry last year.
Mr Gallagher said forward booking by tour operators, domestically and internationally, was a vital component of the hotels sector and uncertainty around its retention was already an issue feeding through from key overseas markets.
He called on Mr Varadkar to fight for the rate to be retained “as a key competitive advantage for Ireland as a tourism destination, particularly in the run-up to the Gathering in 2013 which is being billed by the Government as Ireland’s biggest ever” tourism initiative.
“At a time when the recovery in overseas visitor numbers is fragile and domestic consumer confidence is weak, the rate reduction has been a very positive driver of demand,” he said.
St Patrick’s Day: Promotion worldwide invitation
THE GOVERNMENT has chosen St Patrick’s weekend to promote “The Gathering”, a worldwide invitation to the Irish diaspora and its friends to visit Ireland in 2013.
According to Redmond O’Donoghue, chairman of Fáilte Ireland, Ministers travelling abroad for the St Patrick’s weekend will be given special presentation packs and advice on how to invite their hosts, and host country population, to Ireland.
Agreement in principle has been reached with the GAA to organise a global Gaelic games competition, there are to be 12 major monthly events throughout 2013 and a “special Olympics-like” community approach used to twin communities with others across the world. Local festivals are to be enhanced and expanded, and a “write and invite” campaign set up, Mr Redmond added.
Overall the aim is to bring an extra 325,000 visitors to Ireland in 2013, generating almost a billion euro in extra revenue. TIM O'BRIEN