As announced under the Jobs Initiative, a second reduced VAT rate of 9% was introduced on a temporary basis in respect of certain services and goods mainly related to tourism for the period 1 July 2011 to end 2013. Specifically the 9% rate applies to restaurant and catering services; hotel and holiday accommodation; various entertainment services such as admissions to cinemas, theatres, certain musical performances, museums, art gallery exhibitions and fairgrounds/amusement parks, the use of sporting facilities; hairdressing services; and printed matter such as brochures, maps, programmes, leaflets, catalogues, newspapers and magazines. The introduction of the 9% VAT rate is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector. The measure has received a very positive response from the tourism sector and a recent press release from the Restaurants Association of Ireland, for example, reports the passing on of the new rate by the majority of members surveyed. Of course compliance by business in reducing prices is key to the success of the initiative and this will be kept under review and will be evaluated before end 2012 in order to determine its effectiveness in aiding the industry. If it is shown that the VAT reduction has little or no effect in aiding the industry then the measure is open to being reformed or abolished. In addition, checks on the correct operation of VAT, including the rates of VAT applied are integral parts of Revenue's audit and compliance programmes.
The measure is estimated to cost €120 million this year and €350 million in 2012 and 2013.