Leo Varadkar (Dublin West, Fine Gael)

I propose to take Questions Nos. 6, 14 and 217 together.

The jobs initiative introduced a 9% VAT rate from 1 July on a range of services, including hotels and restaurants. The Government also halved employers' PRSI for those on modest wages. These measures are of considerable benefit to tourism businesses, lowering their cost base and allowing them to offer a more competitive product to tourists. The industry needs to play its part in passing on these cost reductions.

At this stage it is too early to assess the impact of these measures on either tourism numbers or on employment in the sector. With regard to tourism numbers, we will need to consider the figures on an annual basis to assess properly the impact of the initiative. With regard to the impact of these measures on sustaining employment in the tourism sector, the most recent figures from the CSO relate only to Quarter 2 of 2011 so do not measure the impact of the jobs initiative and it will be later this year or early next year before we can properly form a view on the effect of these measures on employment.

Based on these and other relevant figures, the VAT cut will be reviewed before the end of 2012 with a view to deciding if it should be continued. Although the CSO figures are not yet available, it should be noted that a recent survey by the Restaurant Association of Ireland showed that in July and August 490 new jobs were created in the sector and attributed this in part of the jobs initiative measures and to the change in joint labour committees, JLCs.

The growth incentive scheme, essentially a rebate scheme for airlines in return for passenger growth, is one of the three elements of an aviation package aimed at increasing tourist numbers. The package also includes a commitment to abolish the travel tax, subject to agreement on the reinstatement of routes and the restoration of lost capacity, and a more targeted co-operative marketing of new routes from key source tourism markets. The impact of the overall package can be measured only when data for the full year is available. The abolition of the travel tax has been deferred pending a further review of the situation next spring. However, I am pleased to report that overseas tourism numbers increased by 11% for the year to the end of July in comparison to the same period last year, and I have every confidence the tourism industry will exceed the targets set for this year.

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