Government should withdraw VAT concession in forthcoming budget

23 September 2015

by Cllr Joe Costello

“I have long argued that the hospitality industry is killing the 'golden goose'. Tourism figures are at an all-time high. Hotel bedrooms are filled to capacity in Dublin, and the increase in the return per available room is the highest in Europe.

“Dublin is the 9th most expensive capital in Europe according to PWC, and the price of a double room in a Dublin hotel has increased by 28pc in the 12 month period from August 2014 to August 2015 according to the international website Trivago.

“This sharp increase in hospitality costs is aggravated by regular spikes in prices for major events such as the All-Ireland Final last weekend. Now it appears that the greed of the Irish hospitality industry is also beginning to impact negatively on major international corporate decisions.

“The recent announcement of the transfer of the highly successful Web Summit to Portugal is a huge blow to Dublin’s economy as 30,000 wealthy visitors in the high-tech industry will now take themselves and their €100m spending money to Lisbon. Last year, prices in bed and breakfast were so exorbitant for the occasion that they virtually overshadowed the wonderful event and soured the experience for many visitors to Dublin.

“It is high time that the Government told the hospitality industry that their greed is damaging the recovering economy, which is still quite fragile.

“The industry lobbied for a reduction in VAT for the sector, arguing that a reduction would enable them to keep their prices low, be competitive and grow the industry. In 2011, the Government accepted their argument and reduced the VAT by a third from 13.5pc to 9pc. This reduction undoubtedly had a considerable beneficial effect in growing the sector.

“However, the hospitality industry has reneged on its commitment to the Government and the people. Unless the industry fully honours its commitment and moderates its prices, the Government should use the forthcoming Budget to withdraw the generous VAT concession that the industry has enjoyed for the last four years.”