Thomas Byrne (Meath East, Fianna Fail) | Oireachtas source

I welcome the opportunity to respond to some of the issues raised in the debate on the motion put forward by the Rural Independent Group. Deputies expressed the view that the 9% VAT rate should be brought back and made permanent for the tourism and hospitality sector. The Deputies proposing the motion also asked that VAT rates be varied across the country such that areas outside Dublin would have a lower rate.

As my colleague, the Minister of State, Deputy Richmond, outlined, it is not possible to have different VAT rates, depending on geography, under the rules set out in the European VAT directive. Moreover, I am not sure whether such differentiation would be desirable. In this country, we have never allocated expenditure based on where it arises. We should not offer differential tax rates, in the form of VAT, in different areas across the country. I do not say that out of any opposition to rural hospitality, which we all want to support. The Government is strongly committed to balanced regional development but I am not sure whether differential VAT rates are necessary and desirable. The example of Celbridge was given and there are lots of other examples.

My colleague, the Minister, Deputy Catherine Martin, is due to publish the tourism policy framework shortly. Our Department has completed the necessary analysis of the submissions made via the public consultation. The new framework will complement Ireland's regional growth strategies and objectives, particularly the four new development strategies for Ireland's Ancient East, which covers a lot of rural Ireland, the Wild Atlantic Way, an internationally successful initiative for the heart of our rural economy, Ireland's Hidden Heartlands and, of course, Dublin.

With regard to the primary focus of this debate, it is important to state that decisions on tax matters, including VAT, are considered as part of the budget. While the Government is not opposing the motion, this does not and cannot mean we have made any decisions in respect of budget 2025. The issues raised in good faith by the Deputies will be considered in the context of the broader budgetary package. The Minister for Finance recently met representatives of the hospitality sector to talk about their trading conditions and their call to reduce the VAT rate for their businesses to 9%.

The Government is very much aware of the cost pressures faced by businesses, despite many of those businesses having a consistently high number of customers. In some cases, the costs they face have been external, particularly on the energy side. Other costs arise from domestic measures such as changes to statutory sick pay, an additional bank holiday and the transition to a living wage. The Government is aware of these challenges and is working to mitigate their impact. The supports we have offered, including tax debt warehousing, the new increased-cost-of-business grant and our significantly increased spending on tourism since 2020, have underpinned employment across the tourism and hospitality sector. The latest Labour Force Survey indicated that economy-wide employment in Ireland reached a record high of 2.71 million by the end of last year, with employment in the accommodation and food service sector standing at 183,000.

One of the best ways the Government has to support not just the hospitality and tourism sector but the wider retail sector is by seeking to ensure their customers - our citizens and taxpayers - have more money in their pocket. Last year, we introduced a range of cost-of-living measures and an income tax package worth €1.5 billion. Further income tax measures can be expected as part of budget 2025. When making budget decisions on VAT or any other tax matter, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework. We are committed to supporting business in these sectors but we must ensure the support we offer is targeted and sustainable. As the Minister of State, Deputy Richmond, stated earlier, a permanent reduction in the VAT rate for the tourism and hospitality sector would impact on all other budget decisions.

While the Government is not opposing this motion, I repeat that no presumption should be made that we have made any decision in respect of the budget. No such decision has been made. However, I reiterate that we fully recognise that tourism and hospitality businesses are integral to the fabric of our economy and society. It is our shared wish across this Chamber that those businesses be supported to thrive in the years ahead. The Government is committed to supporting them right across the country. We have demonstrated that commitment by our actions to date. We will continue to support them.

See this speech in context