Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

This is a very significant concession within the tax code. The annual cost of the lower VAT rate from 13.5% to 9% is €491 million per year, with a cost per VAT percentage point at €109 million per year. This is an exceptionally significant recognition through the VAT code of a very important sector within our economy. In addition to the costs I have shared, it should also be noted that in the sectors covered by this rate, employment has increased gradually each year since 2011, with an overall increase of over 35% in the period from the middle of 2011 to the start of 2017. That is equal to an increase of 40,500 jobs, which is a very significant number.

As is the case with all parts of the tax code, no change made in the past to help with the recovery of the sector can now be taken to be given in future. That is why I made the decision I did on stamp duty for non-residential commercial property. That change was put in place to support the recovery of a sector. Many parts of the sector have now recovered and therefore it is no longer appropriate to have the lower tax rate in place. In the run-up to budget 2018, I considered this change, as I considered many others. I decided it should not be made for two reasons that were touched on by Deputies Mattie McGrath and Fitzmaurice. First, although there are many parts of the country in which hotel are at full capacity - Dublin and Killarney are two very good examples - the reality is we still have many hotels and companies in the services sector in other parts of the country still working to get back to a decent ongoing position for their businesses. As a result, I decided now is not the time to make the change. A further reason I decided it should not be made this year came from consideration of the changes in the value of sterling. Everybody is aware of that and I want to see the effect on short-haul tourism into Ireland from the United Kingdom market. The performance of that market is crucial to how tourism in Ireland performs overall. For both those reasons I decided not to make this change. As a result, I am not in a position to accept the amendment put forward by Deputy Boyd Barrett.

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