Vol. 459 No. 5
67 Mr. Killeen asked the Minister for Finance his views on the Irish Hotel Federation's proposal to reduce VAT on hotel accommodation to 5 per cent in line with EU countries; and if he will make a statement on the matter. [18413/95]
I am aware of the Irish Hotel Federation's proposal. It will be borne in mind in the context of the 1996 budget,
However, I would point out to the Deputy that the cost of the proposal would be significant and that the creation of a new reduced rate of VAT of 5 per cent for hotel accommodation would inevitably lead to calls for similar treatment for other sectors. The cost of such a wider concession would be prohibitive.
It is accepted that the Mediterranean member states apply reduced rates of VAT, ranging from 5 per cent to 10 per cent, to hotel accommodation. However, I would advise the Deputy that, in Ireland, the tourism industry has the benefit of the reduced rate of 12.5 per cent not just for hotel and holiday accommodation, but also of most tourist related services including restaurant services, sporting activities and short-term car hire. Ireland's rating arrangements in this regard are far more generous than many member states of the European Union. I understand that, for example, in the United Kingdom, the standard rate of VAT of 17.5 per cent applies to all of the services mentioned.
