Wednesday, 1 st December 2004

Lack of VAT reform leaves tourism sector at EU competitive disadvantage

The Irish Hotels Federation (IHF) welcomes the provisions in Budget 2005 for the increase in Capital Investment in transport and in personal tax credits, but is disappointed that a blatant anomaly in the treatment of VAT on business expenditure in hotels and restaurants was not addressed. The Federation warmly welcomes the increased investment in our national roads and in transport as these projects will facilitates greater access to all regions and increase the ease of travel throughout the country.

However, IHF President Richard Bourke expressed disappointment that, although the Minister addressed the anomaly of Share Capital Duty to bring it into line with competing economies, he did not take the opportunity to rectify an anomaly in the treatment of VAT on hotel and restaurant costs, which places Ireland at a serious competitive disadvantage in the international business tourism market. The Federation now calls on the Minister to rectify this issue in the upcoming Finance Bill. The IHF believes that there will be an insignificant or no loss to the Exchequer in rectifying this anomaly, but that there is substantial potential for increased business tourism activity and hence overall benefits to the Irish economy.

Richard Bourke points to Visit Britain, the UK’s Tourist Authority, as an example of how a country is using VAT reclaim as part of its marketing strategy to target the business tourism market.

“Today is a lost opportunity. Ireland can not expect to gain a share of the €40 billion global conference and incentive travel business with such an anti business VAT regime,” Richard Bourke states. “Our best efforts to establish Ireland as a location for business tourism will continue to be thwarted, unless we can put ourselves on a level playing field with Britain and Northern Ireland. Ireland can never come close to attaining its potential for business tourism unless it addresses this major anomaly in the VAT system,” says Mr Bourke.

“The Government has made a clear commitment to our industry by establishing the Tourism Policy Review Group and setting ambitious targets to increase visitors to Ireland to 10 million by 2010. In addition, the recently established F á ilte Ireland Business Tourism Forum is placing a much needed and renewed focus on addressing the business tourism market to ensure that Ireland builds a viable business tourism product. However, despite our best efforts to remain competitive, in the face of spiralling overheads and costs, we are reliant on the Government to play provide a level playing pitch that will enable us to compete with our European counterparts,” concludes Mr Bourke.

For information:
Siobhan Molloy / Niamh Boylan Tel: 01 6760168
Weber Shandwick FCC Mobile: 086 8175066 / 086 3809191