Tourism VAT rise under review as Ireland prepares for Brexit

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The future of the Irish tourism industry post-Brexit has once more been brought to fore. Whilst a state tourism body has stepped in to alleviate fears, moves to increase tourism VAT has served to do the opposite.

 

Legislators in Ireland are planning to increase certain tax values in fear that Brexit will cost them considerable amounts of money. Ireland are planning a one percent rise in tourism VAT, to ten percent, on the back of Fáilte Ireland’s recent figures that suggest the country’s tourism trade could lose at least E88m in revenue due to a decrease in visitors from Great Britain.

The Irish tourism trade support body noted that, post-Brexit, the number of UK tourists coming to Ireland has decreased by six percent and could decrease the 1.6m visitors a year by 300,000 by the end of 2017.

Currently costing the Department of Finance E626m a year, the one percent VAT rise would regather a E150m saving from that figure.

“Volatility generated by Brexit during the last year would have led to significant revenue and job losses had other traditional mar- kets, particularly the US, not performed so well,” said Fáilte Ireland’s CEO Paul Kelly.

“We cannot always assume that other markets will continue to compensate in this fashion – particularly as we now face a challenge in those markets from a British tourism product made much more competitive by the lower sterling value,” he added.

Fáilte have recently launched the “Get Brexit Ready” campaign aimed at helping local tourism and hospitality businesses who are at risk, or already struggling, with a loss in trade post-Brexit.

In order to make up for this potential loss in revenue the Department of Finance are further toying with the idea of doubling betting tax, which would also raise it by one percent, in an attempt to collect an extra E50m a year from the E5bn Irish betting industry.

There are many critics against the raise in tax Paschal Donohoe, the finance minister,is planning for their next budget, with the majority of them arguing that the low levels of tax, the fourth lowest in the EU on restaurants, is what helps Ireland compete with other EU countries as a tourist destination.

“We believe it works and continues to work. It is part of being competitive as it is not a rate that is out of line with our tourism competitors. It is in line with the rest of EU countries,”said Mau- rice Pratt, chair of the Irish Tourism Industry Confederation.

Michael Mcgrath,a Fianna Fail finance spokesman,said: “The 9 percent VAT rate has undoubtedly been a significant help to the tourism and hospitality sector and it remains an important part of their offering.”

“Given the volatility in the euro-sterling exchange rate, the drop in inbound tourists from the UK and the deep uncertainty surrounding Brexit, this is not the time for a major policy shift,” he added.


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