Members of the IHF with John and Vera Madden, Templegate Hotel, Ennis
HOTELS and guesthouses across Limerick have criticised the government’s decision to not reverse the tourism VAT hike. The increase in Budget 2019 was kept by Finance Minister Pascal Donohoe for next year.
South Court Hotel boss Dermot Kelly, chairman of the Irish Hotels Federation Shannon branch, said the retention of the VAT increase - from 9% last year to 13% this - has “undermined” Irish tourism’s competitiveness.
He said: “Budget 2020 is heralded as a Budget for Brexit. Despite the serious challenges facing tourism, Government has failed to recognise the importance of competitiveness and its role in the ever increasing cost of doing business in Ireland. This is a missed opportunity to rebalance the tax take from tourism at a time when economic indicators provide significant warning of a change in outlook,” he said.
Mr Kelly pointed out that the tourism industry has been one of the success stories of the economy in recent years, supporting 270,000 jobs and, he said, promoting balanced regional growth across the country.
“Here in Limerick it supports 11,500 jobs and contributes some €327m to the local economy annually. It is therefore disappointing that the Government has failed to recognise the exceptional challenges now confronting tourism businesses. A rate of 9% VAT is the appropriate level for Ireland and would put us mid-range in a European context. This is what the Government should be looking at to ensure long-term sustainable growth of our industry.”
He warned Ireland is already a high cost economy by international standards.
“We are now in a situation where we have a higher rate of tourism VAT than 27 European countries with which we compete. Add to this the challenges around Brexit and the 27% drop in the value of Sterling in recent years and you have a perfect storm.”
The impact, he argued is evident, as 57% of hotels have seen a fall in business.