Imelda Munster (Louth, Sinn Fein) | Oireachtas source

There have been very serious challenges to the tourism industry in recent years, in particular during Covid-19 and with the use of tourist accommodation to house asylum seekers. Businesses are grappling with the cost of doing business, energy prices, food prices and the cost of rent. It is a very difficult time for many.

While I take the point made in the motion that our VAT rate may be high when compared with other European countries, I am not sure an immediate blanket reduction in VAT is the answer. We need to treat hotels and other large accommodation providers separately from other tourism businesses. They cannot be compared to small restaurants and tourist attractions. Domestic and international tourists did not see value for money or reduced room rates in the period when a 9% VAT rate applied. It is fair to say that in most cases the savings were never passed on to the customer. The Department of Finance made a similar finding when it studied the recession-era reduction in VAT for the sector.

In recent years, the exorbitant hotel accommodation costs in some of our cities have damaged our reputation internationally. We all know that it is often cheaper to fly to another country to attend a concert and stay in a hotel than it is to spend a night in Dublin. The use of tourism accommodation for asylum seekers suits the hotels that have signed up to it. Why would it not? There are huge bucks in it for them. It does not work for other tourism businesses, however, or for tourists who will undoubtedly be charged higher prices due to the reduction in the number of beds.

The Government acts as though we cannot differentiate between hotels and other parts of the tourism and hospitality sectors in terms of VAT rates. Of course we can. The EU VAT directive already provides for hotel and holiday accommodation to be treated separately from other areas of the hospitality sector. In response to Covid-19, there were VAT reductions in countries across Europe, for example, in Belgium, where hotel accommodation was omitted entirely. There is nothing whatsoever stopping us from doing something similar. We should also explore the introduction of a targeted PRSI rebate scheme to support struggling SMEs. We should examine the VAT situation with a view to exploring more targeted reductions for the sector in the future.

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