Dáil Éireann Debate, Thursday - 28 April 2022
25. Deputy Brendan Griffin asked the Minister for Finance if his attention has been drawn to the concerns of the tourism and hospitality sector regarding the inflationary impact of increasing the VAT rate from 9% to 13.5% from 1 September 2022; and if he will make a statement on the matter. [21473/22]
View answer40. Deputy Brendan Griffin asked the Minister for Finance his plans regarding the increase of the VAT rate for tourism and hospitality businesses from 9% to 13.5% from 1 September 2022; his views on whether this is the wrong time to proceed with such a move; and if he will make a statement on the matter. [21472/22]
View answerI propose to take Questions Nos. 25 and 40 together.
As part of the Government’s response to Covid-19, Budget 2021 brought the VAT rate for Hospitality and Tourism related services and goods down from 13.5% to 9%. This was initially planned for 14 months, from 1 November 2020 to 31 December 2021. This was then extended to 31 August 2022 in recognition of the difficulties facing these sectors.
This extension provides support for a further 8 months to the end of the 2022 summer season, allowing for a longer period of recovery for tourism and hospitality. This measure is only one of the supports the Government has provided for businesses over the course of the pandemic and was always designed to be temporary, with a sunset clause included in the enacting legislation.
A review was undertaken of the 9% VAT rate in advance of Budget 2019. This review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes, which reduces the relevance of the VAT rate applying to the sector.
Should the economic position or tourism demand alter, the VAT rate applicable to tourism and hospitality will be reviewed as part of the budgetary cycle.
