Sir, – Cantillon's "Tourism sector dodges VAT bullet" (October 13th) analysis is simplistic. The tourism VAT rate of 9 per cent was brought in by the Fine Gael/Labour government in 2011 as a temporary measure but such has been its success, in terms of jobs and exchequer returns, that the current Government has very sensibly left it in place.
Cantillon estimates that the “cost” of the VAT rate is €500 million per year. What he fails to acknowledge is that income to the exchequer from the 9 per cent VAT bracket has actually doubled over the last five years due to the strong recovery in tourism and as such the exchequer has shared on tourism’s upside growth.
The VAT reduction has not flowed to the industry but has been passed on to the consumer through reduced pricing. It is true that Dublin hotel prices have risen but Dublin experience is not true for the vast majority of struggling tourism enterprises around the country.
The industry is far bigger than just hotels. There are 220,000 people employed in the sector and the vast majority are in very rural areas where other jobs don’t exist.
International visitors to our shores have increased significantly each year, allowing the tourism sector to create 45,260 jobs nationwide since 2011.
Indeed, the tourism VAT rate in Ireland is appropriate when looking at other European competitors; 17 out of 19 euro-zone countries have tourism VAT rates of 10 per cent or less, therefore Ireland’s rate is now in line with theirs .
The VAT reduction for tourism has proven very effective in helping to create jobs, provide regional balance and support competitiveness.
It is in that context that Minister for Finance Michael Noonan has kept it in place and for that we acknowledge his support.
Tourism is performing well; however, sustainable growth and future jobs are predicated on a competitive industry, a soft Brexit, stabilised currency exchange and continued appropriate government policies.
The VAT rate of 9 per cent for this sector has amply proved its potential for growth and will do so into the future. – Yours, etc,
PAUL GALLAGHER,
Chairman,
Irish Tourist Industry
Confederation,
Dublin 18.