ITIC Urges Irish Government To Cut VAT

by Jason Gorringe, Tax-News.com, London

12 October 2005

In its submission to Government on Budget 2006, published this week, the Irish Tourist Industry Confederation (ITIC) stated that while the government cannot influence major external cost factors such as energy and exchange rates, it can affect many of the domestic cost increases which damage the competitiveness of internationally traded services such as tourism.

The ITIC Budget 2006 submission is set against a background of a fundamentally changed cost, exchange rate and competitive environment; increased global competition for tourism; uncertain macroeconomic expectations particularly in the UK and US, and the impact of oil cost increases on both transport and operating costs.

The submission stated that while there was a good overall visitor performance in 2004 and to date in 2005, weaknesses are emerging. These include the weak performance of the holidaymaker segment, the shorter length of stay and consequent reduction in spending, together with the regional imbalance of tourism distribution, and growing concerns among holidaymakers about costs and value for money.

The industry is also, according to the ITIC, concerned about the high levels of public sector cost increases and the apparent inability to restrain these, and about the fact that VAT and other tourism taxes are higher in Ireland than in most other EU countries.

ITIC’s specific proposals for the Irish government in the run-up to the next budget are:

• Reduce VAT from 13.5% to 12.5%, as a first step towards a level of 10%;
• Reform the non-refundability provisions, which would have a strong positive effect on the conference/convention business;
• Restrain local authority charge increases in 2006 to 2%;
• Increase the real spend on tourism marketing and training by 5%;
• Increase the VAT exemption limit to €50,000 for the smaller accommodation facilities;
• Avoid any new fiscal or regulatory measures which adversely affect tourism; and
• Introduce reimbursement of Vehicle Registration Tax to authorised car-hire companies when cars are exported after use on short-term car hire fleets.

Recommended