Derek Nolan (Galway West, Labour) | Oireachtas source

One of the Government's early successes of which one can be proud - as I am - is the jobs initiative introduced in May 2011 comprising a €500 million stimulus package designed to get the economy moving again. At the time, it was accepted that it was limited and would have a targeted effect and it has done so. The measure particularly targeted at the tourism, hospitality and arts sector, which was to reduce the VAT rate on those products from 13.5% to 9%, had a strong effect in the hospitality and tourism sectors in particular. In many cases, it gave a lifeline and a breathing space to some businesses that were struggling in respect of their margin but it also allowed that sector to reduce its cost base in order that it could be more competitive abroad through a reduction in prices for hotels, and meals, in the arts and so on. The aim was to encourage more people to come to Ireland and support the tourism market, which is an export market. As a Galway Deputy, I am aware the city and county I represent are extremely tourism-dependent. In this context, numbers have increased both this year and last and I believe this job stimulus and the VAT rate have really contributed towards that increase.

Mr. Brendan O'Connor from the economics division of the Department of Finance has stated the 9% VAT rate has had the desired impact it was intended to have and as of the second quarter of 2012, had contributed to a minimum of 6,200 jobs. Both anecdotally and from other studies, one can discern that it has made an even greater contribution to job creation subsequently. There have been positive signs with regard to employment figures in the past year and there has been job creation which, after years of job losses, is to be welcomed. However, we still are at a very fragile state and the jobs in the tourism and hospitality sectors in Galway and nationwide are highly fragile and must be protected. Were the VAT rate to be increased from 9% to 13.5% at the end of the period in question, it would have a negative impact and would cost jobs. Having spoken to hoteliers and restaurateurs across my constituency, I know they simply will be obliged to let people go and that is not something that should be done if it can be avoided.

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