Galway hoteliers have welcomed the Government’s decision to extend the nine per cent tourism VAT rate and reform the energy support scheme for businesses.
Galway Irish Hotels Federation chairman John Ryan says the measures announced now give tourism businesses greater certainty as they grapple with the impact of the cost-of-living crisis on Irish consumers and key overseas markets.
“Today’s announcement is a clear recognition by the Government of the challenges facing tourism and hospitality, Ireland’s largest indigenous employer which currently supports over 250,000 livelihoods," he says. "It will go a long way in helping to sustain the recovery of our industry at a time when businesses and consumers are facing significant economic and financial headwinds.”
Ryan says a vibrant tourism industry is one of the most effective ways to spread employment opportunities and prosperity throughout the entire country.
"That is why the decision to extend the nine per cent VAT rate is so critical for communities and regions that rely on tourism as a major employer and driver of economic activity.”
Mr Ryan says most European countries apply a reduced rate VAT rate to tourism accommodation.
“When you look at the tourism VAT rates among our key European competitors, it is clear that the nine per cent rate is the right rate for Ireland. At nine per cent Ireland is in line with our European neighbours, in particular those countries where tourism plays a key role in their economy.”
Mr Ryan also welcomed changes to the TBESS energy support scheme designed to provide greater assistance to businesses experiencing exceptional increases in energy costs.
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The decision to extend the rate for six months in the tourism and hospitality sector, and for hairdressers, is "good news", according to Marian Harkin TD.
"A sigh of relief has been breathed across the sectors, especially in the Northern and Western Region, where tourism and hospitality play a crucial role in the local economy,” she says.
Local hotels, restaurants and guest houses provide a huge number of jobs, serve local produce and act as important social spaces throughout the region, she says, so keeping the VAT rate at 9% means they can plan ahead with confidence and "look forward to a tourism season in which they can keep their prices competitive and their enterprises alive".
The move also makes the sector competitive when compared with similar destinations such as Portugal, Malta and the Netherlands where the VAT rate is below, or on a par with Ireland.
“This a is a welcome reprieve on a number of levels,” Harkin says, “it protects jobs, it sustains businesses, it will increase tourist numbers and it helps combat rising regional disparity."
Senator Ollie Crowe says the 9% VAT rate for the hospitality sector has provided a much-needed boost to a sector which has undergone huge challenges in recent years.
"We had more than two years when, for public health reasons, there was little to nothing happening in the hospitality sector with closures, and limits on customers. There has been a rebound, but inflation resulting in costs rising sharply over the last twelve months have left thousands of SMEs facing significant challenges.
"The hospitality sector largely comprises small family run smes in every town and village across the country, often such businesses are one of the few employers in smaller and rural areas. It is a sector which needs and deserves support."
Senator Crowe said representative organisations, including the VFI, LVA, RAI and IHF had been very clear in recent weeks about the impact a higher VAT rate would have had on their members and thousands of SMEs across the country.
