Following the announcement during Budget 2019 that the VAT rate for the hospitality sector in Republic of Ireland is being raised to 13.5%, Hospitality Ulster has issued a press release stating the increased rate in the Republic reinforces the need to cut tourism VAT in Northern Ireland.
According to Hospitality Ulster, the Republic's new rate continues to place Northern Ireland at a disadvantage, with tourism VAT at 20% in Northern Ireland – a new gap of 6.5%.
The UK’s 20% Tourism VAT rate is one of the highest in Europe, and Northern Ireland hospitality and tourism businesses are particularly vulnerable as the Republic of Ireland is its second largest market and nearest competitor, the organisation said.
"A Distince Competitive Disadvantage"
Hospitality Ulster chief executive Colin Neill stated, "Hospitality Ulster is leading the campaign for a reduction in the hospitality and tourism VAT rate in Northern Ireland, which at 20% puts us at a distinct competitive disadvantage, particularly as our nearest market, the Republic of Ireland, has had a 9% tourism VAT rate for some years but will now go to 13.5%.
"The new incoming 13.5% rate in the Republic means that there will be a 6.5% difference which is a huge gap and highly detrimental to a sector which supports more than 60,000 jobs across Northern Ireland."
Potential Job Creation
Neill continued, "The latest independent research shows that more than 12,000 jobs would be created across accommodation, visitor attractions and food if the VAT rate was cut to 5%. This would create a sustained positive impression on the economy."
Appealing For Reduction
Meanwhile, Sammy Wilson MP, the DUP's Westminster spokesperson on the Treasury commented, "The decision by the Irish Finance Minister to raise the VAT rate to 13.5% still sounds an alarm bell in the hospitality sector in Northern Ireland.
"How can the sector here be expected to compete when the UK government continues to tie the hands of the sector behind its back on this issue as the Republic pushes on?
"It is imperative that the rate is cut in Northern Ireland so we can continue to grow a vital part of the regional economy. The hospitality sector is an engine for growth and we can no longer suffocate it. This is a live and real problem which is crippling trade.
"We now look ahead to the UK autumn statement to push the chancellor to do the right thing and create a more competitive environment by reducing the VAT rate in NI.
"Last year, we welcomed his commitment to review the issue, but now the answer is staring Philip Hammond and the Treasury in the face after the announcement in Dublin. Another year has passed and he must now make the important decision to support the hospitality sector in an area of the UK that he is responsible for."
© 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.