Monday 15th October 2007

HOTELS CHIEF CALLS FOR A Hold on Tourism Related Taxes
Additional €5M Required FOR TOURISM MARKETING

The Irish Hotels Federation (IHF) in it pre-budget submission urged the Government to avoid increases in tourism and business related taxes in the forthcoming Budget 2007 in order to increase competitiveness and promote development within Ireland’s tourism sector. In its submission Supporting the Competitiveness of Tourism presented to Brian Cowen T.D, Minister for Finance, the IHF specifically calls for no increases to VAT, excise and transport taxes and for the implementation of much needed reforms to local government funding. The need to boost tourism marketing with the allocation of an additional €5 million in funds to promote Ireland is also cited in its submission. In addition, the IHF’s document focuses on the need for more equitable local authority charges and the introduction of supports for a hotel energy efficiency programme.

Avoid increases in tourism related taxes: The IHF wants no increases in tourism and business related taxes in Budget 2008. This includes VAT, excise, energy and transport. Nothing should be done with indirect taxes which worsens the competitiveness of the Irish tourism product. It maintains that there is a strong case for reducing these taxes as the opportunities of a buoyant economy over the past four years to make such cuts were not taken.

Local authority charges: The IHF wants more equitable funding of local government. It stresses that the current Local Authority Rates system should be abolished and replaced with a local income tax based on profitability of a business as opposed to its property valuations. The IHF is calling on the Government to introduce user charges for both businesses and households where levels of use can be determined for services such as water provision, waste collection and planning fees. It maintains that central Government should fund local authorities for social services such as social housing and assistance to the elderly and the disabled rather than relying on business tax inputs to local authorities for this funding. Pending the introduction of such reforms, the IHF is calling for a 1% cap on increases in Local Authority charges and taxes for 2008.

Extra €5m for Tourism Marketing: The IHF calls for a €5 million increase in 2008 towards Fáilte Ireland and Tourism Ireland’s marketing budgets. This, it maintains, will ensure a significant increase in resources to deal with the changing tourism market and greatly increased international competition. The IHF stresses that it is a solid investment proposition as it is estimated that every €1 spent on tourism marketing brings in €15 in tourism revenue. The IHF also calls for the provision of separate funds to Tourism Ireland to implement the recommendations arising from the current review of the Ireland Tourism Brand.

Business Expansion Scheme (BES) and Renewable Energy: The IHF proposes that the legislation with regard to BES tax relief for wind farms be amended so that investors would obtain tax relief once they make their investment rather than having to wait until the wind farm was actually trading for four months. Consideration should be given to using similar legislation to that which provides corporation tax relief to companies that invest in companies engaged in renewable energy generation. The IHF believes that such an amendment would be more equitable for investors and significantly enhance the availability of BES funding for wind farms which are important both for the Irish economy and obviously for climate control. Any change in the BES regulations relating to wind farms should equally apply to other methods of renewable energy generation.

Annette Devine, President, IHF, stated, “The erosion of competitiveness continues to be a major problem for the tourism sector with Ireland experiencing high Irish inflation, increases in minimum wage rates and high local authority charges and taxes. Like other sectors, the hotels industry is suffering from increases in interest rates and the strength of the Euro. The large increase in energy costs is a particular problem for the hotel sector and continuing increases are to be expected.”

“The current system of seeking excessive revenue from business to fund local government cannot be sustained in light of the regional difficulties being encountered by the sector. It is inequitable that our industry continues to contribute in a non-proportional way to local authorities. We’re calling on present local authority rates system to be abolished and replaced with a local income tax based on profitability as opposed to property valuations to pay for the provision of community based services,” stated Ms Devine.

The tourism industry is this country’s biggest indigenous employer with approximately 140,000 people employed in the sector. It is a major contributor to the economy and remains a substantial economic asset worthy of significant ongoing public policy support. In 2006, the Exchequer received €2.8 billion in taxation from tourism and, allowing for indirect and induced effects, tourism accounted for 3.8% of GNP in 2006. It provides employment in every single city, town and village in Ireland.

“By implementing some strategic fiscal measures in both taxation and expenditure policy in Budget 2008, including a significantly increased investment in marketing, the Government will be paving the way for Ireland to attract more tourists and increase tourism revenue throughout the country,” concluded Ms Devine.

ENDS

For information:

Siobhan Molloy/Eoin Quinn Tel: 01 6760168
Weber Shandwick FCC Mobile: 086 8175066 / 087 2332191

TOURISM STATISTICS

• 7.4 million overseas visitors to Ireland in 2006 (6.8 million in 2005)
• Total tourism revenue in 2006 increased to €6.06 billion.
• €4.7 billion foreign exchange earnings in 2006 (compared with €4.3 billion in 2005)
• €1.4 billion in domestic tourism revenue in 2006
• €2.8 billion to the exchequer in 2006
• 3.8% of GDP allowing for direct and indirect effects
• 140,000 jobs in tourism in Ireland.
• 57,000 people employed in the hotel and guesthouse sector – largest employer in the tourism sector
• 873 hotels with over 52,600 rooms (870 hotels with 47,000 rooms in 2005).
• 383 guesthouses with over 4,433 rooms (440 guest houses in 2005).
• Total of over 57,600 hotel and guesthouse bedrooms in Ireland.
• 2% of all hotels are five star status, 10% are four star 36% are three star, 21% are two star and 6% are one star.
• 30% of hotel bedrooms and 22% of guesthouses bedrooms are located in Dublin.