Mr. Jim Power:

I thank Deputy Butler, who comes from the neighbouring parish to mine. When the decision was taken in budget 2019 to increase the VAT rate from 9% to 13.5%, I went on the record as saying that it was a mistake. The timing was awful, particularly as the impact of Brexit on tourism and the hospitality sector was starting to make itself felt in a significant way.

It was a mistake, the timing was wrong and the whole situation has obviously been exacerbated by Covid-19. It is essential that a 0% VAT rate is one of the measures put in place, probably until the end of 2021. A 9% VAT rate should then become a permanent feature for businesses in the industry. Those businesses should get certainty and not be wondering if the rate will change from budget to budget. It is a major burden on businesses.

Can we do that? Of course we can. There are many examples over the years where tax rates have been cut and tax revenue buoyancy generated. I am unambiguous in stating that the reduction of the VAT rate from 13.5% to 9% in July 2011 made a positive contribution to the contribution the hospitality sector in turn made to the subsequent recovery in the economy. It makes absolute sense to introduce lower VAT rates for the sector. Tourism is one of the most competitive service businesses in the global economy. We are competing with many other countries. Anything that can be done to improve the competitiveness of the product will be important.

Thoughts about our competitiveness on an international scale, unfortunately, are for a time a little bit down the road. International tourists will not be a significant feature of the Irish market for the foreseeable future. It is about helping those businesses to survive and stimulating some demand at the moment. It is, ultimately, a matter of international competitiveness.