Hotels’ VAT plea shot down
IN A blow to the hotel and tourism sector, Taoiseach Leo Varadkar has firmly ruled out the introduction of special zero-per-cent VAT rate for hospitality businesses to help them survive and recover from the Coronavirus crisis.
Speaking in the Dáil last Wednesday, Tourism Minister and Kerry Fine Gael TD Brendan Griffin was among a number of Government and opposition TDs who backed the Irish Hotel Federation’s (IHF) calls for zero-per-cent VAT to be brought in to help the industry because of the collapse of tourism and loss of some 200,000 jobs.
Members of the Kerry branch if the IHF have been among the most vocal proponents of slashing VAT to zero for the hospitality sector, in a bid to save the industry and Kerry’s tourism-reliant economy.
Some 16,000 jobs in Kerry are directly and indirectly supported by tourism, which is worth around €600 million to the local economy every year.
The decision to abolish the special nine-percent VAT rate for hospitality businesses – introduced to help the sector recover from the last recession –in the 2019 budget has been harshly criticised ever since.
While the zero VAT proposal had been backed by several TDs, it was immediately shot down as unworkable by Leo Varadkar when he addressed the Dáil on Thursday.
Mr Varadkar said such a cut would be against European Union Rules, and any decision on reducing VAT rates would be a matter for the next Government, whenever that is formed.
The Taoiseach said while it could be possible to marginally reduce the 13.5-per-cent VAT rate, cutting it to zero would be contrary to the European Union VAT directive.
“It is not possible [to cut the rate] as long as we’re a member of the European Union,” he said.
Mr Varadkar added that the rate could be reduced in future but “that would be a matter for the next government”.