Call for 5% VAT rate for tourism and hospitality in the West and North West

Sligo Leitrim TD Marian Harkin has called on the Government to reduce the VAT rate in the West to 5% for the tourism and hospitality sector.

Speaking on a Dáil motion introduced by the Rural Independent Group to bring the VAT rate in the tourism and hospitality sectors down to 9% Ms Harkin welcomed the suggestion contained in the motion that Ireland should follow the example of countries like Italy, Hungary, Latvia, Lithuania, Malta, Romania and Portugal who have used the EU Reduced VAT Rates Directive to deliver lower VAT rates for peripheral areas.

“Dublin has much greater opportunity to host major events, national and international, whether it is concerts or sporting events.

“For instance, half of Sligo will be in Croke Park next Sunday to support the black and white. Dublin has the venues and the opportunities to host all these major events, meanwhile, tourism is really suffering in regions outside the capital and needs every bit of support it can get. In that regard we can see how the steeply reduced VAT rate is working in other EU countries,” Ms Harkin said.

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“At the very least we need to look at a pilot program for one to two years where we would have a lower VAT rate on hospitality business outside of Dublin. The North west would be an ideal location because, first of all, it is by definition rural and peripheral but crucially, it is beside the border with Northern Ireland and the lowering of the VAT rate would be hugely significant in equalizing the cost between running a business North and South border and giving those businesses a real chance of survival.

“One of the crucial issues for many towns in the areas that I represent is that hotels have been taken over to provide accommodation for Ukrainians,” Deputy Harkin continued, “and local tourism businesses, whether it's a local restaurant, an activity centre, a souvenir shop or a local tea shop have all suffered greatly because there is no footfall in the context of either national or international tourism since the Government took over the local hotels.

“The very least the Government can do is to now reduce the VAT rate for those tourism businesses that rely partly or largely on the tourists that would otherwise have stayed in those hotels. I'm thinking of places like Rosses Point in Sligo, Bundoran in Donegal, indeed all of North Leitrim, Ballinamore in South Leitrim and many other towns where some or all of the tourism accommodation is no longer available for tourists.

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“I have a letter here from the proprietors of a restaurant in a town in my constituency telling me their business has dropped by 20% since the local hotel was devoted to hosting Ukrainian refugees. Meanwhile energy costs continue to increase, supplier costs go through the roof and there is no support coming from Government.

“This is one of the many letters, emails and messages I have received from small businesses and I believe that reducing the VAT rate to 9% or further lowering it lowering it to 5% in peripheral regions would pay dividends to those businesses, their communities and in the final analysis to Revenue,” Deputy Harkin concluded