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Dáil Éireann díospóireacht -
Tuesday, 9 Feb 1999

Vol. 500 No. 1

Other Questions. - Tourism Revenue.

Michael D. Higgins

Ceist:

58 Mr. M. Higgins asked the Minister for Tourism, Sport and Recreation the further progress, if any, he has made in relation to his proposal to introduce a £3 tourist tax; and if he will make a statement on the matter. [3484/99]

(Dr. McDaid): I wish the two new Labour Party spokespersons well in this very important and interesting portfolio. I hope that over the next two and a half years we can develop a good relationship.

Over the next two months.

One of the options which I have explored in consultation with the Irish Tourist Industry Confederation for the future financing of tourism destination marketing is the possible introduction of a modest visitor levy in line with practice in many other countries. This, of course, is without prejudice to the case for continued EU funding for tourism marketing under the next round of Structural Funds. While my deliberations on future options have progressed well, no final decision have yet been taken on this matter.

I thank the Minister for his good wishes and also hope that I am here for at least two years. The Minister stated that no decision has been taken regarding the tax but the perception is that it will be put in place. Will the Minister put the industry at ease and say that he will not introduce this tax? Ireland is perceived as an expensive destination because it is an island. Does he agree that the introduction of such a tax would encourage visitors to come into Ireland through airports and ports in Northern Ireland?

We agreed to establish a tourism marketing fund in our programme for Government. How that is established appears to be the problem. This does not mean that we will give up our request for Structural Funds for the entire industry. However, we must be realists and accept it has been indicated that there will be a reduction in EU funding for this area. We will be between £10 million and £15 million short in terms of marketing. This country is currently at the top of the European tourism league. Our figures are phenomenal. By the year 2006 the figures show that eight million people will visit this island. That will be worth £4.3 billion in revenue, making tourism the largest single industry in the country. Good policies have been pursued by different Administrations over recent years and we have kept the industry to the fore. I will not take my foot off the pedal and allow the marketing area to lose out on funding. If there is a crisis or if budgetary cutbacks are required, the simplest place to cut back is in the market. I am sure the Deputy will agree that we require a tourism marketing fund, but the problem is where that fund will come from. The strategy is that it would come from the EU, the Exchequer and the industry itself.

With the modest levy we could set up a fund – the industry has agreed that we require a £20 million fund – over the next five years, rather than have an ad hoc system where one wonders what one will get year after year. The tourism marketing fund we have agreed to set up is what the industry needs in future. A small levy would be one way in which we could proceed, but no decision has yet been taken on that. I have been in discussions over the past six months with the industry. I have assured them that no decisions will be taken unless they are in agreement and that is where the matter rests at present.

I agree 100 per cent with the Minister that we need to market Ireland and I have always said so. In my constituency we are well aware of the need for marketing. Does the Minister not agree, however, that the Government has a duty to shoulder a major proportion of the marketing budget, as the Exchequer is the main beneficiary from the billions of pounds we receive from tourism?

Yes, of course, I agree that the Exchequer benefits enormously from tourism but the Exchequer provides up to £30 million towards Bord Fáilte. Approximately £8 million of that goes towards the true marketing area. There will be a huge deficit, however, if EU funding dries up. Unlike any other sector, tourism must begin marketing a couple of years in advance. A fund is required to plan for the future. The Exchequer will not be found wanting in that area, if it comes to that.

I still want to be able to set up this fund which will put the industry on a firm footing over the next five years. No decision has been taken on this matter yet, but at the end of the day the Exchequer and the Government will not be found wanting as regards funding.

I have not come back to haunt the Minister from a previous existence, but Deputy Allen has the flu. The Minister said that no final decision had been taken on deliberations concerning a possible small levy. He also mentioned the establishment of a fund of £15 million to £20 million. How much is being spent on marketing Ireland by the industry? I know about the floppy disc one can get for this purpose.

Is the Minister flying a kite? He has covered every conceivable aspect of this matter. Is this a deliberate policy by the Minister to introduce a minor levy, as he calls it, which would increase as time goes on? Will he clarify the position regarding this proposal – is it serious or is it dead in the water?

The industry has put approximately £1 million into destination marketing, which is the OTMI. However, as the Deputy knows from having been in this position previously, all those involved in the industry say they are doing individual marketing as well. They state that the figure they are putting in on an individual basis, whether it be Aer Lingus, other air carriers or ferries, is approximately between £40 million and £50 million.

I firmly believe that a marketing fund is necessary. The industry's research indicates that £20 million per year is required. The introduction of a small levy, as has been mentioned, is a way of putting the industry on a firm footing over the next five years. The matter has been discussed at length with the industry. It is not a kite. We could apply that type of idea.

I remind the Deputy that a similar levy applies in all European countries, with the exception of Italy and Switzerland which do not have to do any marketing. For example, in Austria the levy is £8 and in Belgium it is £10. In Denmark, where it was introduced last year, it is £7.80, in Finland £7.30, France £7, Germany £3, Greece £14, the Netherlands £3.20, Norway £12.20, Portugal £7.80, Spain £4, Sweden £10 and in the United Kingdom it is £10 sterling. The levy operates in nearly every country in Europe where it is put towards a marketing fund. I believe in the idea and think such a levy is needed here if we are to put the industry on a firm footing, but it will not stop us from seeking further EU funding. As I stated, no decision has yet been taken. A decision will only be taken when I have the full co-operation of the industry.

The Minister has clarified two things: first, this is not a kite and, therefore, it is a distinct proposal by the Minister and his Department and, second, there are similar levies in other European countries. However, the very reason for our success in tourism is not our similarity to other European countries but our difference. Is the Minister not contradicting himself by saying that this is a distinct and definite proposal to the industry, while at the same time saying that if there is a shortfall the Exchequer will not be found wanting? Is the Minister not giving the industry a clear out by saying that he will cover whatever shortfall exists? Even if the industry rejects the proposal for a minor levy proposal, the Minister has already confirmed that the Exchequer will take up the slack.

I see the point the Deputy is making. I am saying, however, that the Government is trying to set up such a system on a firm basis. I have already pointed out that over the next four years, tourism will become the number one industry, worth £4.3 billion to the economy. We need to have a planning strategy in place so that we can plan for the next five years. Otherwise, we will go back to the usual system of getting a bit from the Exchequer on a year by year basis. There is no future planning in that type of system.

Dr. Upton

How much does the Minister propose to raise from this tax? What is the cost, in terms of infrastructure and wear and tear, for the average tourist who is here for an average period? Can I take it that the Minister will push this proposal in the event of the industry not agreeing to it? The industry would be very foolish to agree to it. Will the Minister implement this tax in the event of the industry not accepting it? What will happen in that event?

It is estimated on the basis of current figures that it would be worth approximately £20 million a year. In the initial years, it would be worth approximately £17 million with extra amounts available to the Exchequer in subsequent years.

Dr. Upton

What is the cost in terms of wear and tear caused by tourists to infrastructure? For example, how much water does the average tourist use while in Ireland and what is the estimated cost in terms of road use? I understand these taxes are put in place in other countries to meet those costs.

I am not sure I fully understand the Deputy's point. However, the money raised would not be used for infrastructure. It would be geared towards marketing.

Does the Minister have any fears that if this tax is implemented it may set an unhealthy precedent in terms of, for example, Galway County Council's idea of charging an entry tax to the Aran Islands? I understand the Minister's Department is in the process of appointing consultants to examine the structures in tourism. If that is the case, will the concept of a tourist tax be included in the consultants' terms of reference?

This is a matter for the industry and me and no decision has been taken. We are discussing it as a possible method of meeting shortfalls. The point raised by the Deputy about Galway County Council is a matter for the Department of the Environment and Local Government. However, Ireland will face huge competition in the coming years, particularly from the Far East and China. If Ireland is to maintain its current status, which has been built up by different Administrations in recent years, we must ensure a proper marketing fund is available. It is one idea and it does not prevent us seeking further EU funds. It will not be introduced unless the industry agrees.

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