Reasons while the 9% tourism VAT rate cannot be changed
In 2011 when the live register reached almost 450,000 nationally, the Government had the foresight to introduce a tourism VAT rate to promote much-needed job creation. That measure has been of enormous benefit to the economy in Sligo and Leitrim by supporting growth and making our tourism offering more competitive internationally. Bringing the rate in line with the VAT rates of other competing European countries was the correct decision.
It is allowing tourism businesses in Sligo and Leitrim to restore investment in product development and service levels whilst also aiding increased capacity – all critical for the long-term success of the industry. And as the biggest investor in Hotels and guesthouses not only provide local employment opportunities, we buy local services, source locally produced food and provide a vital infrastructure in support of local business and communities. This year, Irish tourism will yield over €2 billion in various taxes, equivalent to 23% of tourism revenues and up more than €500 million per annum on 2011. Given the right conditions, the tourism tax take is projected to continue to grow strongly, reaching €2.7 billion per annum by 2025.
On the employment front, the 9% VAT rate continues to be one of the most successful job-creation initiatives in modern times having created over 65,000 new jobs across the country since 2011. Tourism now supports employment for approximately 235,000 people – including 4,900 jobs in Sligo and Leitrim. The profile of these jobs is diverse and inclusive, ranging from highly skilled roles to entry-level employment that provides great opportunities for advancement. We are now on track to create a further 40,000 jobs over the next five years and it is vital that Sligo and Leitrim sees its share of these new jobs. What is sometimes lost in discussions about the economy is that tourism growth is one of the most effective ways to spread employment opportunities and prosperity across the entire country. With 70 per cent of tourism jobs based outside of Dublin, tourism’s wide geographic distribution is critical to sustaining regional economies. This is particularly true for Sligo and Leitrim, where tourism contributes €140 million to the local economy each year.
It is essential that economic policy does not become detached from the realities facing businesses in the regions – the engine behind Irish tourism. We know in Sligo and Leitrim how tourism remains very seasonal and a lot of our local hospitality businesses struggle to break even outside the peak seasons. The much-heralded recovery has been very uneven with many parts continuing to lag behind following a severe loss of ground during the downturn.
Regards,
Fergal Ryan, General Manager, Clayton Hotel Sligo and Chair of the Sligo-Leitrim Branch of the Irish Hotels Federation.