Pearse Doherty (Donegal, Sinn Fein)

I will come in briefly. I support this measure. I welcome the fact the accommodation sector is not included in this. Originally, the advice was that we could not do that and then it became clear that it could be done. I agree with the other speakers and I will agree with the amendment later on in relation to reviewing this. It is really important. That is my position on all of these types of measures that are introduced. They have to be reviewed and the effectiveness and all the rest looked at. VAT is a blunt instrument. I definitely agree that it would be far more desirable if we could use this to target companies with particular turnover. If there is a better way to target this, we need to be open to that idea. I supported the reduction at different points, as others have said who have been involved in the reduction to this rate. When it was reduced, others benefited as well, who should not have benefited. However, VAT is VAT at that point in time and the same challenges would have existed then as exist today that cannot be carved out.

I have put my own view on the record for quite a while. The interesting thing here is that we are obviously not reducing the VAT rate on hotel accommodation or accommodation services, which is at odds with what happens in Europe. In Europe, in terms of the EU 27, what you have is either the same rate for both sectors, namely, for hotel and accommodation services and for restaurant and catering services. Either you have the same rate or you have a reduced rate for the hotel sector. That is the trend in Europe. Therefore, Germany would have a lower rate for the hotel sector than it would for catering and hospitality. In a number of other countries, such as Portugal, for example, the rate for hotels is 16% and 13% for restaurant and catering services. It is right that we are doing that because there are rip-off costs that are being charged in the hotel sector, although there are challenges. This is problem here. Just like the catering services, there are companies that are doing well but there are others that are really struggling and that is also the case in terms of hotels, particularly where you have regional variances. I come from Donegal. We used to have the issue of people coming into tourist offices in Dublin to ask how to get to Donegal. They thought you would have to go up to the North and ask there. That was the reality. As the season is not as long as in other areas, it is challenging. The issue I raised - I have said in the past that I was always open to this type of idea, particularly if it was targeted - was because when we look at our European competitors, we are out of sync.

As Deputy O'Callaghan pointed out, our closest competitor has a far higher VAT rate than us. We should put that on the record. However, looking across Europe, 18 countries in Europe have a lower VAT rate than us in the hospitality sector. Only eight of them have higher rates than us. In some of those cases, where the eight have a higher rate than us, they may have a lower rate in terms of the accommodation sector. Therefore, it is the case that we needed to do this. Is 9% the right figure? We are not at the top of the list. Others have lower rates than us but there are very few now. There are only about six or seven that either have equal or lower rates than us at this stage, so we are currently in the top third. That is the problem when we are dealing with VAT rates where only two reduced VAT rates are available and there is the impact of moving it up to 10%. All of that was teased out during the election. Therefore, I wanted to put that on record.

I have another amendment in terms of the wider sector that availed of the 9% rate in the past, which I will deal with later on.