Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

While the industry has indicated a belief that the reduction in VAT to 9% has been helpful, I am not so sure that is proven. There has been increased activity but that was in line with an upturn that was already taking place in the tourism sector. It is worth remembering that it was not a gift of the Government to the tourism sector; it was a gift of the private pension funds of the State that has provided the funding. It was done on a three-year basis, so it was not willy-nilly that the Government managed to provide funding again this year. Some €400 million was taken from private pension funds. Funding was extracted to abolish the travel tax, or a portion of it, but it did not materialise. I supported the Minister of State on this point because the airlines did not buy into the kind of increased activity that was suggested. The saving to the State was not returned to the private pension funds, but that is another day's work. I am guarded about the impact of the reduction. It was a stimulus, but on a meal costing €50, the saving buys a cup of tea at the end. I am not sure that is an incentive for increased spending. It created a good story and increased talk about reduced costs, but the jury is out on its effectiveness.

See this speech in context