Dáil Éireann Debate, Thursday - 27 June 2013
11. Deputy Éamon Ó Cuív asked the Minister for Transport, Tourism and Sport if he will seek to extend the 9% VAT rate for tourist related economic services; if there is ample evidence to suggest that the reduced VAT rate has increased activity in the tourist sector; his further plans to boost the sector; and if he will make a statement on the matter. [31062/13]
Amharc ar fhreagraThis question relates to the extension of the reduced VAT rate of 9% beyond the end of this year. I am very conscious that the tourism and hospitality industry would like to see the rate continued through 2014 and beyond.
I am also conscious that it has been estimated by the Department of Finance that the VAT reduction costs the Exchequer up to €350 million a year. In that context, I am supportive of retaining a reduced rate, but that can only be justified on the basis of clear evidence of the impact of the reduction.
In this regard, an examination of the VAT rate cut by the Department of Finance in late 2012 found that employment among accommodation and food providers increased by 6,200 from the second quarter of 2011 to the equivalent period in 2012. This amounted to an 8-9% increase in employment in the sector when compared to the decline in overall market services employment (excluding accommodation and food and public sector employment) in that period. It also found that inflation in the sector lagged the overall trend.
More recently, the VAT cut has also helped improve perceptions of value amongst our overseas visitors. When the percentage of people who had a negative perception of our value for money is subtracted from those with a positive perception, the figures have improved dramatically since 2009. 2009 had a negative rating of -11% and 2012 was +24%. Other positive indicators include hotel occupancy rates which were at their highest in 2012 since 2007 with a noticeable jump between 2011 and 2012 from 56% to 61%.
As the Deputy is aware, the final decision regarding matter of taxation policy is the responsibility of my colleague, the Minister for Finance.
