Hoteliers welcome Budget move to retain 9% tourism VAT rate

The Government has retained the 9 per cent VAT rate for tourism – but with a warning to Dublin hoteliers against price hiking, which Minister for Finance Michael Noonan said happens when there are special events in the capital.

Nevertheless the move was immediately welcomed by the the Irish Hotels Federation (IHF) which said it was a "a vital support for employment growth", and one which would build "on 33,000 new jobs created by tourism businesses since the measure was introduced in 2011".

Tim Fenn, chief executive of the federation, said the budget was "very positive" for tourism businesses which now support 205,000 jobs across the country, "equivalent to 11 per cent of total employment".

“The 9 per cent VAT rate, in particular, is of enormous importance to the industry, helping to level the playing field for Irish tourism when competing with international destinations,” he said in a statement.

“As a result, Irish tourism is now on track to create a further 40,000 jobs over the next five years.”

The industry agreed with the view of Mr Noonan that the measure was a “major benefit, much sought after” by other industries. It described the measure as “one of the most successful job creation initiatives in modern times”.

Last year, Ireland attracted 7.3 million overseas visitors and total tourism revenue was €6.45 billion, of which foreign exchange earnings in the economy amounted to €5 billion.

Retention of the VAT rate was also welcomed by Minister for Tourism Paschal Donohoe who said he was also pleased Budget 2016 saw the first funding increase since 2008 in the allocation for overseas tourism marketing activity. "This will allow us to continue to encourage more tourists to come to Ireland and help grow jobs in that sector".

The Government also increased the provision for the maritime programme by some 7 per cent to €93 million – a move which will ensure the Irish Coast Guard will be able to maintain its level of service agreements relating to the search and rescue helicopters contract.

The funds will also support the work of the Commissioner for Irish Lights, the body that serves as the country’s lighthouse authority.