VAT REFORM TO BENEFIT TOURISM
One of the most important fiscal decisions for tourism in a decade   

The Irish Hotels Federation (IHF) today stated that the inclusion in the Finance Bill of a provision to allow business delegates attending conferences to reclaim VAT paid on hotel accommodation is a tremendous boost to the competitiveness of Ireland in the international business tourism market.  The VAT reform announced by Brian Cowen T.D., Minister for Finance, in the 2007 Finance Bill published today, will be a major contributor to Ireland significantly growing its share of the lucrative business tourism market valued at €40 billion globally.  The IHF also strongly welcomed the tax incentives announced for mid-Shannon region to stimulate tourism growth and provide a platform to take advantage of its tourism potential.

The IHF praised the Minister for addressing Ireland’s historic competitive disadvantage relative to other European countries, even Britain and Northern Ireland. The IHF believes that the communication internationally of this VAT reclaim measure together with the soon to be announced international convention centre for Dublin could see a doubling of the volume of Ireland’s share of international business tourism over the next seven years.

According to Annette Devine, President of the IHF, which represents over 1,000 hotels and guesthouses employing almost 60,000 people in the tourism industry, the measure now gives Ireland a level playing pitch when competing for an increased share of the lucrative, high end global business conference and incentive travel market. “It was vital this tax anomaly was reformed as Ireland was losing out to other destinations where VAT was refundable. Considering the National Conference Centre is being progressed and conferences organisers are looking at Ireland for potential international events when it is open for business, the VAT reform will now be a part of the overall business proposition to attract these major international events. We would suggest that this is one of the most important fiscal reforms undertaken in the last decade to assist the tourism sector,” says Ms Devine.

The IHF maintains that the reform will be a major contributor towards meeting the ambitious targets set by the Government’s Tourism Policy Review Group to increase visitors to Ireland to 10 million people by 2012. It will greatly assist marketing efforts to establish Ireland as an attractive destination on the international conference map.   

“Minister Cowen is to be applauded for his decisive action to reform this out of step fiscal measure, and Minister John O’Donoghue’s efforts to raise this as an issue hampering our tourism growth at the highest Government level has truly succeeded. This reform signifies an understanding that Ireland’s largest indigenous industry needs specific measures to aid its growth,” continues Ms Devine. The Minister must also be acknowledged in creating a very positive fiscal device to boost tourism activity in the mid-Shannon region. This initiative has the potential to incentify investment in tourism attractions and amenity developments which would be a major boost to a region that, despite having enormous natural and cultural assets, is not achieving its tourism potential.

The IHF stressed that, as Ireland’s largest indigenous industry, tourism is an extremely valuable economic resource that has doubled in size over the past decade. Ireland attracted just over 7.4 million visitors last year, generating €4.6 billion in foreign exchange earnings, €2.7billion for the exchequer and supports 150,000 jobs countrywide. The IHF maintains that tourism is the most important segment of indigenous enterprise and has the potential to generate more economic benefits with appropriate fiscal and marketing measures supporting industry spend.