Low VAT Rate Here to Stay, Says Minister

By Steve Wynne-Jones
Low VAT Rate Here to Stay, Says Minister

Minister for Finance Michael Noonan says he has "no plans" to change the low VAT rate of nine per cent for the hospitality sector in the next Budget.

Minister Noonan (pictured) told a local Kilkenny radio station that the rate, which was originally intended to be a temporary measure, is here to stay as long as he is in the department.

"I have no plans to change the nine per cent VAT rate in the next Budget but of course any change would be for subsequent ministers after that," he added, as reported in the Irish Independent.

The Revenue recently said that the reduced rate, introduced in 2011, has cost the State over €600 million in in tax income. This figure was arrived at assuming the same amount of business would have been done if the old 13.5 per cent rate was still in place.

According to industry experts, it has helped create over 30,000 jobs in the hospitality sector while not costing the State as much as originally predicted.


Stephen McNally, president of the IHF also urged the Government not to reinstate the old rate, pointing to the marked increase in tourist numbers since 2011.

"The Government has to think if they turn off the tap are they at risk of chasing tourists away from the country?" said McNally. "If the rate is not maintained big questions will be asked about what will happen."