Wednesday, 7th December 2005

TOURISM INTERESTS CALL FOR CHANGE TO VAT ANOMALY

In reaction to today’s Budget announcement, the Irish Hotels Federation (IHF) calls on the Minister for Finance to urgently address the serious competitive disadvantage which the Irish VAT system places on business tourism.  “All of Ireland’s European competitors with a VAT rate of over 10% allow business tourism such as conferences, incentives and major corporate meetings to reclaim VAT on hotel expenditure. This is not the case in Ireland and even our nearest neighbours Britain and Northern Ireland have this facility,” states Richard Bourke, President, IHF.  “The IHF is now calling on the Minister for Finance to address this anomaly in the forthcoming 2006 Finance Bill”.

According to Richard Bourke, the Irish hotel VAT rate of 13.5% is the sixth highest in Europe and the second highest of the Eurozone nations, behind only Germany at 16%. In addition, this non reclaimable VAT situation places Ireland at a further competitive disadvantage in trying to attract conferences, corporate meetings and incentive travel to consider Ireland as a location for events.

“Unless this anomaly is addressed Ireland will not be in a position to compete for a fair share of the €40 billion global conference and incentive travel business with such an anti business VAT regime.  The Government through its Tourism Policy Review Group has set ambitious targets to increase visitors to Ireland to 10 million by 2010. The fact that this VAT disadvantage has not been rectified will impede this target being achieved as Ireland is not attractive to the valuable business tourism market when compared to other countries where this VAT can be reclaimed as an input.  Now that there has been significant progress made for the provision of a National Conference Centre this continued VAT anomaly, unless addressed, will undermine marketing efforts to place Ireland on the international conference map,” says Mr Bourke.

However, the IHF did acknowledge the clarity given in the Budget today for the phasing out of hotel capital allowances.  In addition, it welcomed the increase in the disposable income resulting from changes in personal income tax and childcare provisions.  It also welcomed the additional funding for major capital projects which will hopefully speed up the implementation of the Transport 21 initiative, thus easing the difficulties of travelling throughout the country.   

The IHF represents more than 1,000 hotels and guesthouses nationwide.

ENDS

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