8 April 2009

Hoteliers Welcome Measures to Restore Public Finances

Commenting on yesterday’s supplementary budget, Matthew Ryan, President, Irish Hotels Federation, states, “This budget gives us a roadmap to bring the country’s public finances under control and restore confidence in the economy both nationally and internationally. The success of our hospitality industry relies on economic stability, and these measures should provide some foundation for a return to growth in the wider economy over the medium term.”

However, the IHF is concerned that the Minister is too reliant on tax increases for public financial stabilisation instead of current expenditure reductions. The 2009 adjustment is an extra €1billion in tax, €800 million in PRSI and Health levies, which are effectively taxes, and only €886million of a current expenditure reduction with €576 million of a capital reduction. Mr Ryan stated that the situation for 2010 and 2011 is worrying in that a combined (full year basis) adjustment of €9.35 billion is planned, of which €4.6 billion is tax and only €3 billion is current expenditure. This is not sustainable and will not contribute to increased economic activity.

Banking system – access to credit
“While the Federation welcomes the measures announced to stabilise the banking system and seek improvements in the supply of credit to the real economy. The objective must be to provide greater transparency around access to liquidity and to provide small and medium sized enterprises with access to the working capital they need for the day to day running oftheir businesses. We hope the cleansing and repairing the banks’ balance sheets will assist a return to normal lending practices that will support economic activity. We are, however, concerned that the general tax payer should not carry the burden of the loan write down without a substantial contribution from the banks shareholders.”

VAT: The IHF is concerned that scope was not found to reduce VAT to stimulate economic activity. This could have been financed by additional current expenditure reductions.

Public Sector Charges: “We are calling on the Government to re-examine public sector charges and commercial rates which are having a considerable knock-on effect on businesses throughout the country. There is a pressing need for reductions in this area. It is no longer feasible for Government to talk about competitiveness at the national level and allow local authorities to impose monopoly type price increases which directly reduce competitiveness.”

ENDS

For information:

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