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Irish Tourism Industry Calls For Retention Of VAT Rate

by Jason Gorringe,, London

06 September 2017

The Irish Tourism Industry Confederation (ITIC) has called on the Government to retain the reduced nine percent value-added tax rate for the sector in next month's Budget.

ITIC's pre-Budget submission stated that, "In terms of taxation and expenditure decisions, Budget 2018 is critically important to the Irish tourism industry." An estimated 228,600 people work in tourism and hospitality jobs, and the sector was worth EUR8.3bn (USD9.9bn) in 2016.

According to the submission, the industry is entering into a period of uncertainty, thanks to international external pressures prompted by the UK's decision to leave the EU. ITIC estimates that Brexit will cost the Irish tourism sector at least EUR100m in 2017.

"To alter Ireland's tourism VAT rate upwards would damage the industry's competitiveness at a critical time of British tourism decline and weakening exchange rates," the submission argued.

ITIC said that Ireland's tourism VAT rate is in line with its European competitors, with 17 of the 19 eurozone countries applying VAT rates of 10 percent or less. It added that that 56,700 new tourism jobs have been created since the rate was cut in 2011 and that, due to the increase in the volume of tourism, the industry now returns more revenue to the Exchequer than it did when the old 13.5 percent rate applied.

The submission also called for the continued suspension of the airport departure tax. ITIC said the zero rate has incentivized many airlines to introduce new routes and that, in "a very price-elastic context, where low-cost carriers hold significant market share, any change in this policy would be very detrimental."

TAGS: VAT rates | VAT special schemes | tax | value added tax (VAT) | Ireland | VAT legislation | United Kingdom | travel and tourism | legislation | tax rates | tax reform | trade association | trade | European Union (EU) | Europe

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