Bernard Allen
Question:2 Mr. Allen asked the Minister for Tourism, Sport and Recreation the position regarding his proposal to introduce a tourist access tax; and the discussions, if any, he has had with tourism interests. [7535/99]
Ceisteanna – Questions. Priority Questions. - Tourist Access Tax.
The various options for the future funding of tourism destination marketing were set out in detail in my Department's discussion paper, "Strategy for Tourism in the Context of EU Structural Funding 2000-2006". In that paper it was proposed that a tourism marketing fund would be established and it was suggested this could be financed through a combination of financing from the EU, the industry and the State, with an enhanced level of partnership between the key players.
Since the preparation of this document last year, my Department has been engaged in a consultation process with the industry, through the Irish Tourist Industry Confederation (ITIC) who examined funding and institutional options in their planning document entitled "Strategy for Growth beyond 2000".
I share the industry's objective of ensuring that a substantial marketing fund for Irish tourism will be in place for the new millennium. Ireland's performance in a growing but hugely competitive international marketplace has been excellent over the past decade with ambitious targets for foreign earnings and for visitor numbers consistently being achieved.
Under two EU co-funded operational programmes for tourism, covering the period 1989-99, the State, in partnership with the industry, has made excellent use of Structural Funds in marketing Ireland as a tourism destination abroad. My Department is making a strong and persuasive case for continued EU funding under the next round. However, the outcome of negotiations on future structural funding for Ireland and the subsequent allocation of that funding between individual economic sectors, will not be known for some time yet.
Given the uncertainty over, and timing of, decisions on future EU funding, the introduction of a modest visitor levy is one of the options being considered by my Department in consultation with ITIC, as a possible mechanism to contribute to the future financing of tourism marketing.
The Minister seems to be approaching the negotiations regarding EU funding in a very defeatist way. He is looking at a doomsday situation of introducing a tourist access tax to fund the marketing programme. If we assume he is introducing a £3 per tourist access tax, what will be the take on that? Will the take from that tax be ringfenced as suggested by tourism interests? Is the Minister aware of the strong reservations of Ryanair, Aer Lingus and the representative bodies of tourism interests in this country about the tourist tax?
I am not taking a defeatist attitude in this matter. Like every other sector we are pursuing our case for EU funding. However, as the Deputy will be aware, we are also realists. We understand there will be a drop in EU funding and we might as well accept that. We are, however, at the top of the European league with regard to marketing and tourism figures. We have 5.3 million people coming in and I am determined to ensure this country remains at the top of the European league.
Huge competition is developing on our doorstep. Scotland is now talking about devolution which means that the Scottish will be focusing on themselves. They are a problem next door to us, in tourism terms. Scotland is a huge sleeping giant. In addition, the Far East is beckoning for many other countries, so there is huge competition. Two weeks ago I was in Milan where I spoke to some major hotel groups. For example, the Shangri-La group told me it has 39 hotels worldwide, 15 of which are in China. Therefore, one can see the competition that will develop there.
Both the Government and the tourism industry realise we will have to have a tourism marketing fund, which we have agreed upon, to keep this country to the fore. We have also agreed that the figure for the fund should be in the region of £20 million over a period of five years. That would be an ideal figure to keep us at the top of the league. How we will raise that funding is a matter that is currently under discussion. I suggested a small, modest visitor levy should be the way forward. It is all a matter of supply and demand. Through our marketing achievements we can create the demand for people to visit here. The modest fee I am talking about would yield approximately £17 or £18 million in the initial years, and would probably increase to more than £23 or £24 million in years to come, thus averaging out at £20 million per year over five years.
As regards the Deputy's second question, one cannot ringfence anything. We should create a fund of £20 million a year over the next five years, as the industry has suggested. That is what I am trying to do and this would be a way of contributing to it.
We must confront the reality that we are facing huge competition. In the year 2006 we expect 8 million people to visit the country, which will be worth £4.5 billion to the economy. If we achieve those targets it will make tourism the number one industry. It is well worth looking after this industry and we must do so. I assure the Deputy and the House that I will not make any decisions without the backing and co-operation of the industry.
Would the Minister agree there is a serious contradiction in his statement? He said we have to be competitive and are facing major competition from areas such as Scotland and the Far East, yet in the next breath he said we must introduce a tourist tax to market Ireland effectively. Does he agree that any tourist tax will make this country less competitive? The Minister quoted figures concerning the take from tourism, which are trotted out on a monthly basis. Since there is a £1.1 billion tax take from tourism, which shortly will be our largest industry, surely the Government should provide £20 million for the marketing drive without killing the goose that lays the golden egg by making the industry less competitive vis-à-vis our competitors. Will the Minister agree that he will not get agreement from tourism interests unless there is guaranteed ringfencing of the revenue take?
Those matters are the subject of constant discussion between me and the industry. I will only come to Cabinet if the proposals are acceptable to the industry and when I have its backing. With regard to the £1.1 billion figure, there is a huge input to the Exchequer from tourism which is a net contributor. We need all that revenue to aid other Departments. We must pay for health, the environment and education. That is why we garner revenue. All those within the industry – including hoteliers, publicans and tour operators – benefit from spending on education, health, the environment, sewerage and water services. They benefit across the board as a result of being net contributors to the Exchequer and, from that point of view, they are beneficiaries in any event. We are the only country in Europe that does not have such a levy. In Austria they charge £8, in Belgium £10, in Denmark £7.80, in Finland £7.30, in France £7.70, in Germany £3, in Greece £14, in Italy £3.20, in Norway £12.20, in Portugal £7.80, in Spain £4, in Sweden £10 and last year they introduced a £10 sterling charge on anyone who moves anywhere in the UK. We, a small nation on a small island in the middle of the Atlantic, are the only country in Europe without such a levy. I do not believe a modest levy of this nature would cause a problem to incoming tourists, particularly in the way it will be brought about. It will have the opposite effect. I want to ensure the industry has a say in the matter I do not want to be heavy handed. I would like the industry, in accordance with the Little report, to take an active role in the matter. I do not see the necessity for the State to be deeply involved in this area. Those in the industry know their business and we need only set up the fund and ensure there are adequate funds.
If we set up such a fund it will put this country's industry on a firm basis to face all competition in the next five years.
The Minister trotted out the departmental propaganda on tourist tax rates in Europe but conveniently ignored the fact that Ireland has one of the highest VAT rates in Europe and is the only island member state without a land link to Europe, since Britain has rail access to Europe. Is it not ironic at a time when we are trying to support agriculture in every way – at the recent agriculture Ministers' negotiations – that we are attempting to kill by taxation our second largest industry, soon to be our largest if we treat it properly? Would the Minister agree that is a major contradiction?
The Deputy has given me a golden opportunity to remind him why the people voted in this Government at the last election. They voted us into Government because of our policy to reduce taxation—
The Government is increasing taxation.
—and to reduce the incidence of crime and unemployment. We have reduced taxes, we have reduced crime by 16 per cent—
The victims of last night's crime would not agree.
—there are 50,000 more people working and 46,000 people are off the live register.
The Minister talks about reducing crime, but he does not deal with it.
I am delighted the Deputy has given me this chance.
Deal with the issues.
We are reducing taxes, we are reducing crime and we are creating employment. Those were the issues on which we were elected. I am sure the Deputy has read the report in today's newspaper of the Minister for Agriculture and Food's successful outcome in the European negotiations.
Does the Minister agree his statements contradict his policies? He is boasting about Government commitments to reduce tax, but he is introducing a tax, over which people have no control.
The time allocated for priority questions has expired. We must proceed to other questions.