Review: Hiking VAT on tourism will raise the UK rate

  • Review: Hiking VAT on tourism will raise the UK rate
    Independent.t. E.
    Every year, around the same time, there is a lot of speculation about the rate of 9pc tourism VAT and whether it will be saved in the budget for October will be made by the Finance Minister Paschal Donohoe.
    https://www.independent.ie/business/brexit/comment-hiking-vat-on-tourism-would-raise-brexit-stakes-37231427.html
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Every year, around the same time, there is a lot of speculation about the rate of 9pc tourism VAT and whether it will be saved in the budget for October will be made by the Finance Minister Paschal Donohoe.

Every year, around the same time, there is a lot of speculation about the rate of 9pc tourism VAT and whether it will be saved in the budget for October will be made by the Finance Minister Paschal Donohoe.

Therefore, the speed 9pc to be this year? Or will he return to the rate of 13.5 PC, which was last in force in 2011? The truth is that no one knows for sure, but in reality it will probably be later on the decision of the Cabinet to day budget.

Talking about the degree 9pc as “preferential” rate or VAT “subsidy”, as some commentators, this is an inaccurate analysis. Often this is accompanied by a false reference to the “cost” measure, while in fact the VAT rate of tourism is very profitable for Finance. Income own figures, in the first full year 9pc VAT rate (2012) in revenue totaled 630m; in 2018, revenues are expected to amount to €1.04 billion as a result of increased activity in this sector. So instead to be the cost, the 9pc VAT rate in tourism is extremely good for the national Treasury.

The fact that the VAT rate for tourism Ireland finally, in line with the rest of Europe – 16 of the 19 Eurozone countries tourism VAT rate for 10pcs or less, so that Ireland, in this rare case is fully competitive in comparison with other directions. To increase speed make us less competitive in a period of uncertainty with the UK’s exit from the corner. It will add the cost of the system at a time when we need to keep a close eye on our value for money ratings.

The latest wheeze is considered, allegedly in response to the Dublin hotel rates that rose as the demand for travel services exceeds the supply of new hotels, some split-level VAT, where large hotels to pay a higher rate than smaller ones.

How this might work, or even how many bedrooms defines a “great” hotel, it is difficult to understand, and most importantly there is a real danger that the increased VAT rate will have adverse side effects for the production of new hotels, which are finally delivered; 5,000 new bedrooms in Dublin alone over the next three years, according to CBRE. These hotels are vital in order to add power and growth opportunities and most importantly will mean that supply and demand are in sync, no moderating future growth in consumer prices.

Any further increase in costs can lead to lower demand and the largest indigenous population damage in Ireland. The tourism industry – hotels, attractions, restaurants, boarding houses, caravan and camp sites, activity providers and many others rightly point to the fact that since its inception seven years ago, the 9pc VAT rate helped tourism and hotel business, create thousands of jobs. A recent analysis of the Irish Confederation of tourism industry (ITIC) shows a remarkable 79,100 jobs were created in tourism and hospitality in 2011.

The good news is 68pc of these new jobs outside Dublin and in the regions. No other industry can come close to that kind of performance, and if tourism is a big regional producer of jobs, it certainly should be supported and nurtured with appropriate tax and investment policy.

Earlier this year, we produced an eight-year plan for industry entitled Tourism: industry development strategy until 2025, in which tourism is to set ambitious aims to grow overseas earnings at 65pc. However, this is only possible when a number of favorable factors and one of them is maintaining competitive rates of VAT 9pc. Now is not the time to meddle with the successful formula that worked so well, and so much more to offer.

And back to the quarter and month, which is a great look that risks to bring down the Irish economy has shifted. Analysis shows us that hard leaving the UK will cost the Irish tourism €260m in its immediate consequences. It’s a knock, and tourism is a unique subject leaving the UK with 40 PCs of all international visitors coming from the UK.

Soft, medium or hard-boiled, quarter and month will not be good for Irish tourism and Mr. Donohoe should be aware of this when he delivers the budget. Policy VAT 9pc was clearly positive in different areas – jobs, regional balance, Treasury income, the growth of industry. Leave well enough alone, Minister.

Eoghan O’mara Walsh, CEO of the Irish Confederation of tourism

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