Ministers scramble to defend VAT hike on tourism industry
A SERIES of ministers scrambled to defend the 50pc hike in VAT on the tourism sector amid outrage in the industry at the budget measure that will raise €466m.
Representatives of hotels and restaurants have claimed rural businesses will be worsthit and Tourism Minister Shane Ross has faced calls for his resignation.
Mr Ross insisted he had fought against moves to return the VAT rate to 13.5pc and sought to placate critics pointing to extra funding he says he secured to help the tourism industry.
Meanwhile Business Minister Heather Humphreys said the reduced 9pc VAT rate brought in to help the tourism industry during the economic crisis was always intended to be a temporary measure. She pointed to other supports in the budget for businesses in the regions.
Junior minister John Halligan said the reduced rate had helped create 69,000 jobs in the hospitality sector and this was “way ahead of what was expected”.
Mr Ross has borne the brunt of the criticism of the budget move that freed up significant revenue for tax cuts and spending measures elsewhere.
The Restaurant Association of Ireland accused him of failing to defend them and said he should resign, a call Mr Ross has rejected.
Mr Ross insisted the Independent Alliance “fought a battle” against the budget VAT hike and that he had argued for a levy on “pricegouging
hotels”.
He said he has sympathy for B&Bs and smaller businesses which will suffer in comparison to high-priced hotels. He said: “I would have loved to have seen them exempt, but taxes are unpleasant for everybody.”
He insisted he secured “a large amount of money, about €38.5m, for tourism development”.
Ms Humphreys said the reduced rate had created jobs in the tourism sector but that a Department of Finance review found it had “served its purpose”.
She said she was conscious of the challenges facing tourism and said the extra funds in the budget will be used on initiatives like the Wild Atlantic Way. She added: “There are many other supports out there for businesses.”
Earlier, she highlighted a €300m long-term loan scheme available to businesses and farmers as part of the Government’s response to Brexit. There is also an extra €10m for the IDA’s regional property programme aimed at attracting foreign direct investment.