VAT reduction 'not being policed'

The Government is not "policing" the implementation of the 4.5 per VAT reduction, Minister for Tourism Leo Varadkar has insisted.

Mr Varadkar also said it was "never the plan for us to go hotel to hotel or restaurant to restaurant to see if they've passed on the reduction".

He said "the key thing really is for businesses that can afford to pass it on, to pass it on and a lot of them have done that - a lot of the big hotel chains, down to McDonald's, you name it, have done it".

He added that "in other cases they're absorbing increases in costs or taking on more staff, and if they're taking on more staff that's even better than passing on the reduction".

He said there were other cost factors involved including increased energy prices that were on the way.

Mr Varadkar was speaking today at the unveiling of almost €6 million in funding for four tourism projects, including the Book of Kells in Trinity College, Garnish island in Cork, Lough Rynn in Co Leitrim and a downhill mountain bike trail in Killarney.

Asked if he was happy that the 4.5 per cent reduction in VAT was being implemented by the hospitality the Minister said it would be reviewed at the end of 2012 for the 2013 budget and "what we'll be looking at then is have there been price increases and have there been employment increases, and that will be the basis on which we judge whether it has worked or not, particularly if there is an increase in employment in the sector".

The Minister also said he would be making an announcement within the next fortnight about whether to drop the €3 air travel tax. There would be further discussions next week with Tourism Ireland and the airlines.

The department had monitored the decrease from €10 to €3, and passenger numbers had not increased significantly.

"They are only up about 4 per cent or 5 per cent on this time last year, so there hasn't been a huge increase."

But there were other factors involved, Mr Varadkar said, including the cost of fuel and "the fact that people are less well off not just in Ireland but in other countries so there isn't a direct correlation between the travel tax and the number of people flying".