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Firms urge Govt to keep tourist VAT rate

Wednesday, August 27 12:51:14

The reduced VAT rate for tourism services must be extended until 2016 to ensure that visitor numbers continue to grow at the current strong pace, according to Dublin Chamber of Commerce.

Official tourism figures show a 10pc increase in visitor numbers during the first eight months of 2014.

Dublin Chamber says that the 9pc VAT rate is essential to maintaining a competitive tourism product and cautions that removing it will push prices up and undermine the excellent progress being made.

Gina Quin, Dublin Chamber Chief Executive said, "The 9pc VAT rate places Ireland in a favourable position versus a majority of other EU Member States, particularly in the food and restaurant sector. Other countries are moving in a similar direction. Germany, France and Spain all currently operate low VAT rates for hotel stays, while Switzerland has announced a four year renewal of its reduced rate. The Irish Government must now commit in Budget 2015 to extending the application of the 9pc VAT rate into 2015 and 2016. One third of all hotel bed-nights are booked one year in advance, so providing a level of certainty on the VAT rate will allow the tourism industry to market this competitiveness advantage."

To boost the recovery in other sectors, Dublin Chamber is also calling on the Government to consider the expansion of the reduced VAT rate into other labour intensive industries, where EU law allows.

Ms Quin added: "Services such as construction, the renovation and repair of private dwellings and hairdressing are mostly operated as small business and do so on very tight margins. A small reduction in operating costs could yield extremely positive effects, both for the consumer and in terms of growing employment opportunities."

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