Sharp Dáil exchanges concerning 13.5% VAT rate

Ireland cannot reduce the VAT rate to zero per cent because it would contravene EU rules, Taoiseach Leo Varadkar has said, following calls for the measure to assist the tourism and hospitality sector.

But he said there was potential for the next government to reduce it.

Minister of State at the Department of Tourism Brendan Griffin was among a number of Government and Opposition TDs who called in the Dáil on Wednesday for zero per cent VAT to be introduced to help the industry because of the collapse of tourism and loss of some 200,000 jobs.

When the issue was raised again in the Dáil on Thursday Mr Varadkar said it would be possible to reduce the 13.5 per cent rate, but to cut it to zero would be contrary to the European Union VAT directive.

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Independent TD Michael Collins said that when the rate was increased from 9 per cent in the budget to 13.5 per cent numerous restaurants and cafes in west Cork closed.

He also called for the establishment of a stand-alone senior minister for tourism. The Taoiseach asked which ministry he wanted to abolish to make it possible.

Mr Varadkar said it “is not possible [to cut the rate] as long as we’re a member of the European Union”. The next government could reduce the rate but “that would be a matter for the next government”.

Self-isolation and tourism

The Taoiseach also said the Government would consider making it mandatory for passengers arriving at Irish ports and airports to complete forms detailing their whereabouts while self-isolating.

But he warned that “making it mandatory for people to fill in forms to self-isolate for 14 days when they come to the country is not good for tourism. People will not come to Ireland if they have to isolate for 14 days”.

He said “we need to get to the point where we can have air travel start again”. He expressed confidence that air travel could start again for business and leisure before the end of the year.

Mr Varadkar also said the Government is “increasingly confident” that the first phase of easing restrictions and reopening the economy on May 18th can be completed and a final decision would be made on May 15th by the Cabinet.