The industry has reacted negatively to the government's Budget 2019, criticising the cessation of the special 9% VAT rate as well as the decision not to decrease excise duty on alcohol.
The VAT rate on hospitality was reduced to 9% in 2011 in an attempt to stimulate tourism and has been widely praised for its success. During his budget speech, Finance Minister Paschal Donohoe said that the restoration of the 13.5% VAT rate meant that he would be able to avoid hiking other taxes. He expects €466m to be raised as a result of this measure.
Evelyn Jones, Government Affairs Director of the National Off-Licence Association (NOffLA), said: “Increases in excise duty were emergency measures, implemented in times of economic need. Ireland’s economy is now the fastest growing in Europe, and so like USC and other emergency measures, these must be rolled back.”
Currently, upwards of 50% of the cost of a bottle of wine is excise. 81% of NOffLA members surveyed said they believe that a 15% reduction in excise on alcohol would mitigate against the likely impacs of Brexit.
Adrian Cummins, Chief Executive of the Restaurants Associaiton of Ireland, called it "A thoughtless budget.
"This was an election budget paid for by the restaurant and tourism industry," he continued.
Michael Lennon, President of the Irish Hotels Federation (IHF), urged the Minister to defer the increase until there is clarity over Brexit and to allow existing contracts for group bookings to be completed as prices are already agreed.
Mr. Lennon called for the introduction of a Tourism Satellite Account within the Central Statistics Office (CSO) to provide a full analysis of the economic activity in the Tourism industry and how much it contributes to each county. “It will also provide independent verification to assist those who rely on the National Accounts, where tourism is not identified, to inform their deliberations on taxation and economic policy,” he said.
To help offset the VAT rate increase, Minister Donohoe increased funding provided to the Department of Transport, Tourism and Sport by €35m with a particular focus on regional tourism programmes.