Dáil Éireann Debate, Thursday - 29 September 2016
47. Deputy Brendan Ryan asked the Minister for Finance his views on whether any decision to continue the reduced 9% VAT rate for the hospitality and tourism sector should be contingent on those industries complying with Government policy in respect of collective bargaining and wage-setting mechanisms, such as joint labour committees. [22551/16]
Amharc ar fhreagraThe 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. The tourism sector is a key sector in the Irish Economy and the introduction of the 9% VAT rate was aimed at reducing costs during a very challenging time for the sector. The objective was to boost tourism and create additional jobs. While the VAT rate was due to revert to 13.5% in 2014, I retained the 9% rate on tourism activity in Budget 2014 because the initiative had proved to be a major success. Between the second quarter of 2011 and the first quarter of 2016, on a seasonally adjusted basis, the number of people working in the Accommodation & Food Services Sector nationally increased by 31,000, taking total employment from 114,900 to 145,900. This increase of 27% compares to an increase of 7.2% in overall employment over the same period indicating that the measure may have been successful in terms of job creation and has made a significant impact on the competitiveness of the tourism product.
The Government, in the Programme for Partnership Government, has committed to increasing revenue from overseas visitors, growing employment in the tourism sector and increasing the number of visits to Ireland, through the retention of the 9% VAT rate on tourism related services, among other measures, providing that prices remain competitive. With reports of rising prices within the tourism sector, particularly in Dublin, it is incumbent on the industry to ensure that this relief continues to be passed through fully to the consumer. My Department will continue to monitor developments in this regard.
With regard to employment within the sector, Ireland has a robust suite of employment rights legislation to protect all workers, including minimum wage legislation. These rights apply across all sectors. Other wage setting frameworks include joint labour committees, registered employment agreements and sectoral employment orders which are underpinned by recent legislation. Engagement in these frameworks is voluntary on the part of the stakeholders concerned.
