Hoteliers Reject SIPTU Claims Regarding 9% Tourism VAT Rate

By Publications Checkout
Hoteliers Reject SIPTU Claims Regarding 9% Tourism VAT Rate

Stephen McNally, IHF president, believes SIPTU needs to "act responsibly and stop jeopardising jobs."

The Irish Hotels Federation (IHF) today today condemned SIPTU’s position on the 9 per cent tourism VAT rate as irresponsible and reckless. Stephen stated that the Government measure continues to be one of the most successful job creation initiatives in modern times, helping to create more than 33,000 new jobs.

“Since its introduction back in 2011, the tourism VAT rate has been an enormous success in levelling the playing field for Irish tourism when competing with other international destinations. It continues to deliver much-needed employment creation across the country,” says Mr McNally. “The measure is yielding real results and benefits on the ground with almost three quarters of hotels and guesthouses hiring additional new staff in the last year alone. For SIPTU to now call for its withdrawal is nothing short of reckless given the number of livelihoods that depend on Irish tourism. It’s time for SIPTU to act responsibly and stop jeopardising jobs.”

Mr McNally states that, with wages accounting for 42% of turnover in hotels (one of the highest levels in Europe), the benefits of the tourism VAT rate have been felt directly by hotel employees in the sector who are among best paid and most protected in Western Europe. He notes that growth in employment has been achieved by keeping prices low and passing the VAT reduction on to customers over the last three years as shown by recent Failte Ireland research (link<>),* enabling tourism businesses to operate in a highly competitive international market.

Annually, the initiative results in an Exchequer gain of €165 million in social welfare savings and additional income tax. As a whole, the tourism industry now supports approximately 200,000 jobs - equivalent to 11% of total employment in the country.


Despite operating in a highly competitive global market, Irish tourism has started to turn the corner following years of poor performance. This is largely due to pro-tourism Government policies which, if continued, will help the industry achieve its full potential and create a further 40,000 jobs by the end of the decade. This will deliver enormous benefits to the Irish economy, says Mr McNally. Tourism currently accounts for 4% of GNP and tourism revenues of in excess of €6 billion, the significant majority of which comes from overseas revenue.

Commenting on the JLC systems, Mr McNally states that, while the tourism VAT rate supports employment growth, the re-introduction of the Joint Labour Committee (JLC) system jeopardises jobs by creating counterproductive inefficiencies and rigidities into the Irish labour market. He states that JLCs have lost all relevance since the introduction of the National Minimum Wage Act which has provided Ireland with one of the highest gross minimum wage rates in Europe. This goes hand in hand with over 40 other separate pieces of extensive employment legislation including the Working Time Directive.

The IHF continues to call for all employment law to be created solely by legislation introduced by the Oireachtas alone and to be applicable to all employments. The IHF is strongly opposed to employment law being created by organisations such as the JLC or the Labour Court.