Minister for Finance Michael Noonan has indicated that the 9% rate of VAT for the hotel and tourism industry will rise in the forthcoming budget.
It was reduced from 13.5% in 2011.
Speaking in Limerick on Friday, Mr Noonan said the reduction was brought in as a temporary measure and both the Department of Finance and Revenue had built its restoration into their Budget figures.
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“There is a big lobby on but when I reduced the VAT on the whole hospitality industry from 13.5 to 9 per cent, there wasn’t a single representation on my desk to do so, but people were very surprised and it worked and it created a lot of jobs.
“It has reinforced and got a lot of the tourist industry back again and the tourist industry is now growing,” he said.
He said that if it was retained he would have to find €360 million elsewhere.
Minister For Tourism Leo Varadkar has been lobbying to keep et VAT rate forlabour-intensive tourism industry and related services such as restaurants, cinemas, hairdressers, sport facilities and publications at its current 9%.
Since its introduction in 2011, the Restaurant Association of Ireland (RAI) told a meeting for the Oireachtas Committee on Jobs, some 9,000 jobs were created in the sector.