Leitrim hoteliers express concern over plans to hike consumer taxes

Denyse Campbell, President, Irish Hotels Federation, on behalf of 28 local hotels and guesthouses throughout Sligo and Leitrim, has written an open letter to all local TDs to highlight its growing concerns about plans in September to increase consumer taxes on Irish hospitality and tourism. 

"Government estimates indicate that the proposed increase in VAT to 13.5 per cent would see people paying an additional €560m in taxes each year. That’s a 50 per cent increase in taxes on everything from the price of a cup of coffee, to the price of a meal out, a stay in a hotel or guesthouse and the cost of social events such as weddings.

"This is at a time when people’s personal finances are already under significant pressure due to the cost-of-living crisis. 

"This has a knock-on effect on the decisions the average person makes when deciding whether or not to spend money on discretionary items such as going out for a meal with family and friends or taking a short break in Ireland. 

"Tourism and hospitality are particularly vulnerable and invariably one of the first to take the hit. Increasing taxes on already hard-pressed consumers is therefore the last thing the country needs.

"From a tourism perspective, the current 9 per cent VAT is the right rate for Ireland. It is in line with average rates of tourism VAT across Europe. Increasing the rate of VAT paid by consumers to 13.5 per cent would make us an outlier among our competitors. We would have the third highest tourism VAT in Europe, which would seriously undermine our international competitiveness and ability to attract visitors.

The reality is that Ireland is already one of the most expensive places in the world in which to live and do business. Recent figures show that general consumer prices in Ireland are the highest in the EU at over 46 per cent above the average. This begs the question we are asking all TDs to consider: “Why should Ireland, as an island destination, have the 3rd highest tourism VAT rate in all of Europe?”

For that matter, how can it be in the interest of Sligo and Leitrim’s vitally important local hospitality and tourism industry for us to have among the highest taxes on visitors and people holidaying at home – second only in the EU to Denmark?

"Increasing VAT on hospitality and tourism would pose significant risks to a vital part of our economy that supports over 20,000 businesses throughout the country. This is an industry that, prior to the pandemic, supported over 270,000 livelihoods including some 5,000 jobs throughout Sligo and Leitrim, generating €178m in revenues annually for our local economy.

"Ireland should be doing everything possible to support indigenous economic activity that distributes prosperity and opportunities throughout the entire country, including regions such as our own. This requires a long-term Government strategy that balances a focus on competitiveness, investment in our people and allocation of resources for targeted development of our tourism infrastructure.

"The last thing we should be doing is increasing consumer taxes on hospitality and tourism and making Ireland less competitive. On behalf of hoteliers in Sligo and Leitrim and our wider tourism community, we are urging local TDs to support our call on the Government to retain the 9 per cent VAT rate."