asked the Minister for Finance if he will relieve the hotel and restaurant industry from the current high levels of VAT and excise duty in view of the damaging impact they have on the industry.
Ceisteanna — Questions. Oral Answers. - Hotel and Restaurant Industry VAT.
13.
I am aware of the views of the hotel and restaurant industry on the impact of indirect taxation on their business activities, notwithstanding the benefits to the hotel industry of the substantial VAT reduction for hotel accommodation which I announced in this year's budget speech. I have recently met with representatives of both the tourist industry and the restaurant sector to discuss their case in detail.
I have to take account of the fact, however, that any reduction in the rates of VAT which apply to meals and drink or in excise duties on drink, would result in very substantial revenue losses unless offset by tax increases in other areas.
I have indicated to the industry that I will bear their case in mind in preparing the budget for 1986.
In view of the fact that experience of the hotel and restaurant industry and the tourist industry generally in the last three or four years was very different from the experience of the tourist industry in every other EC country, and in view of the fact that——
Has the Deputy a question?
Yes. In view of the fact that the recession in the hotel industry is due almost exclusively to the levels of VAT and excise duty here——
Rubbish.
The Deputy should cut the preamble and get to the question.
——which are far higher than in any other EC country, would the Minister not acknowledge that it is urgent and essential that he should respond positively to the recommendations of the industry not only for the sake of the economy but also for the sake of increased revenue from buoyant activities in those areas?
As I indicated in my reply I met many representatives of both groups mentioned in the question and I have examined their submissions in great detail and with great care. I would not agree with every assertion made in those submissions, nor with the suggestion in the Deputy's question that the problem is all due to taxation, because it is not. I have also pointed out to the Deputy that, if we are to have reliefs of taxation in any sector they must be offset by increases in taxation elsewhere. On the final part of the Deputy's question, as I pointed out many times before in this House, the proposition of the self-financing tax cut is a snare and a delusion. I am surprised that the Deputy persists in it even in the face of the evidence we now have from the reduction on excise duty on spirits at the end of last year. It was very clear from that that it takes time for revenue to recover even in an area where price elasticity and demand are very high.
In view of the latest revenue figures which disclosed a shortfall both in VAT and excise duty from the projections in the budget, and in view of the fact that this is attributable to the high levels of taxation which are now higher than in any other OECD country, will the Minister not acknowledge that the direct consequence of levels of taxation which he introduced in 1983 and subsequently followed is a recession in this industry, for reduced revenue——
This is a repetition of the last question.
Is it not obvious that if our prices are higher than elsewhere in Europe we will have a smaller number of tourists proportionately coming here? If the Minister wants to attract tourists he must review the levels of VAT and excise duty and bring them into line with what applies elsewhere.
It seems to have escaped Deputy O'Kennedy's notice that so far this year it appears that the level of total revenue from tourism will be higher than ever before. It is something he should take into account before making these extraordinary assertions. The shortfall in the revenue to which the Deputy referred is a shortfall compared with budget forecasts, not a shortfall in relation to revenue accrued last year.
I said that.
The shortfall is not due to high levels of taxation. The Deputy is mistaken in alleging that our indirect taxation is higher than anywhere else in Europe. That is not the case.
Ask the OECD?
The shortfall is not due to high levels of taxation but to a number of other factors.
One last question——
I am moving on to the next question. We have only three minutes left.
I only asked two questions. I want to ask one last supplementary.
I am moving on to the next question.
Will the Minister accept——
Minister, please answer Question No. 14.
(Interruptions.)
Will the Deputy please resume his seat?
(Interruptions.)
Will the Minister please answer Question No. 14?