Dáil Éireann Debate, Thursday - 20 February 2014
25. Deputy Derek Nolan asked the Minister for Finance his plans to introduce further fiscal measures to incentivise the tourism and services sectors, such as the extension of the 9% VAT rate to other service operators; and if he will make a statement on the matter. [8247/14]
View answerVAT is charged on the supply of goods and services, and the rate applying is subject to the requirements of EU VAT law with which Irish VAT law must comply. While the majority of tourist related services apply at 9% it is not possible to extend this treatment to all tourist activity, such as tour guide services, and the short-term hire of cars, boat, caravans and mobile homes, which currently apply at the 13.5% reduced rate. These services should ordinarily apply at the higher standard rate, which is the case in most other EU Member States. However, as Ireland applied a reduced rate to these items on 1 January 1991 we are entitled to continue applying that reduced rate, provided it is 12% or greater. In this context, it is not legally possible to apply the rate of 9% to tour guide services, and the short-term hire of cars, boat, caravans and mobile homes.
The 9% VAT rate on tourism related goods and services has had and continues to have a very positive effect on the growth and sustainability of that sector. The most recent data available from the CSO of economic growth broken down by sector relates to the year 2012, and shows that there was a year-on-year growth in gross value added for the accommodation and food services sector, compared to 2011. Expenditure by overseas travellers to Ireland recorded an increase of 0.6% in 2012 compared with 2011. In addition, over the first three quarters of 2013 there was a 13% increase in expenditure when compared with the same period in 2012. There is a clear impact in terms of employment in the accommodation and food service sector which has increased by over 16% between the period Q2 2011 to Q3 2013 an increase of over 18,000 jobs in seasonally-adjusted terms. In terms of numbers of trips to Ireland, the total number was up by 7.2 per cent in 2013 when compared with 2012 and up 7.4 per cent compared to 2011.
