Ross targets large hotels ‘milking the system’ over VAT
TOURISM Minister Shane Ross intends to target large hotels around Ireland who he believes are taking advantage of tourists.
Speaking at Tourism Ireland’s mid-year review, the minister said he wants big hotels who are “milking the system” to pay more VAT.
The 9pc VAT rate for the tourism sector was first introduced by the government in 2011 to help the industry recover from the recession.
Larger hotels charging uncompetitive prices could soon have this concession scrapped in this year’s Budget.
But when asked what constitutes as a “big hotel”, the Tourism Minister said he didn’t know.
“I don’t know at the moment, but I know there should be challenges and questions being asked to those [hotels] making very large profits,” he said.
“I think there’s legitimate concern about the prices being charged by larger hotels.
“There has to be very serious questions asked whether they should continue to get a preferential rate of VAT.
“It could be a several-tiered system, depending on how it works, but what I am suggesting is that those hotels that are milking the system should not necessarily be allowed a preferential VAT rate.”
Mr Ross added that if the rate of tax was to change, efforts will be made to ensure that it won’t affect the tourism industry as a whole.
“If that rate were to go up, it’s very important that no damage is done at all to the tourism industry,” he added.
He stressed that small to medium-sized hotels or restaurants won’t be affected.
“It will certainly be something I’ll be discussing with the Minister of Finance as a prebudget preparation on behalf of the Independent Alliance,” Mr Ross said.
“It’s obvious there is a problem which is reputationally damaging as well.”
Meanwhile, overseas visitors to Ireland have increased 6.7pc for the first half of 2018, with an additional 307,000 tourists compared to last year.
Niall Gibbons, chief executive of Tourism Ireland, said that North America tourism is up 10.7pc on the first half in 2017, making it another record year.
However, he acknowledged that challenges are on the horizon, such as oil price rises, changes in the fortunes of key markets, international trade barriers and air travel disruption.
Mr Gibbons believes that Brexit dominates all other uncertainties.
“The impact of Brexit on outbound travel from Britain remains a concern,” he said. “The fall in the value of sterling has made holidays and short breaks here more expensive for British visitors and has made Britain more affordable for visitors from many of our top markets.
“Ireland needs to be seen as offering an excellent value-for-money holiday experience, so competitiveness and value for money remain more important than ever in Britain.”