In the wake of much discussion and speculation over the last few months, the government has announced that the tourism and hospitality sector's 9% VAT rate will be raised to 13.5%.
As reported by The Irish Times' live blog, Minister Pascal Donohoe stated during today's (Tuesday October 9) budget, "This government has played its part in supported this sector when it most needed it. Overseas visitors have increased and tourism employment is also up. The sector has never supported more employment than it does today.
"In the case of the tourism sector, the application of the 9% rate was justified in 2011. Judging whether it’s appropriate to withdraw it is always more challenging. The reduced rate has done its job.
"In a new economic reality, it is appropriate to increase the rate of VAT to 13.5% from January 2019. This will raise €466 million next year, which will allow him to reduce reliance on increases in other tax heads like corporation tax."
It was also announced this afternoon that €35 million will be allocated to the department of transport, tourism and sport to provide more targeted supports for the sector. Donohoe said this will help with the development of greenways and increase funding to Ireland’s hidden heartlands.
Additionally, Donohoe revealed that over €110 million will be provided for Brexit measures across a number of departments, including funding for "essential customs requirements and a range of other targeted measures".
Alcohol Excise Duty
Meanwhile, in a press release issued during today's budget, the National National Off-Licence Association (NOffLA) has criticised the government’s decision not to decrease excise duty on alcohol.
NOffLA government affairs director Evelyn Jones commented, "NOffLA acknowledges the government’s decision to retain the current level of excise on alcohol but is disappointed that the government has failed to recognise the commercial realities for the independent off-licence sector, and the Brexit-related threats that our members are facing."
© 2018 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.