Charlie McConalogue (Donegal North East, Fianna Fail)
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Question 18: To ask the Minister for Arts; Heritage and the Gaeltacht the steps he will take to ensure arts and cultural venues such as cinemas, theatres and museums pass on savings to customers in the form of price reductions once the reduced rate of VAT of 9% comes into effect from the 1 July 2011 under the jobs initiative. [16610/11]

Jimmy Deenihan (Kerry North-West Limerick, Fine Gael)
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The introduction of the new temporary 9% VAT rate on certain tourism related services and goods falls within the statutory remit of my colleague, the Minister for Finance. This initiative has been introduced primarily as part of the Government's overall job creation strategy. It will apply to a variety of areas, including the hospitality and tourism sectors, and operate from 1 July 2011 to 31 December 2013. In order for the measure to be successful, it requires the reduction in VAT to be passed on to consumers through a reduction in prices in the tourism sector. With this in mind, the Minister for Finance has stated the VAT change will be kept under review and evaluated before the end of 2012 in order to determine its effectiveness in aiding the industry. If it is shown that the VAT reduction has had little or no effect in aiding the industry, the measure will be reformed or abolished.

I naturally welcome the decision relating to the reduction of the VAT rate to 9% in respect of cultural venues, including cinemas, theatres and museums. This is a recognition that the arts are a central component of our cultural tourism offering. I strongly encourage traders to deal with the savings that arise to benefit all those who wish to avail of these cultural pursuits.

Robert Troy (Longford-Westmeath, Fianna Fail)
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I welcome the Minister's response. The VAT cut will have two effects. First, it will stimulate the creation of new jobs in the sector and, second, it will attract more tourists with prices being reduced to reflect the reduced VAT rate. How will the Minister monitor the position from 1 July? Has the Government set a target for the number of jobs that the VAT reduction will create in the hospitality sector? How will these effects be assessed? The Minister said he would assess them until the end of 2012. What will be his barometer in the context of whether he reviews, retains or abolishes the measure?

Jimmy Deenihan (Kerry North-West Limerick, Fine Gael)
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As I pointed out, the Minister for Finance will monitor and evaluate the effectiveness of the reduction. We will know whether it is being passed on by visiting a cinema and so on to ensure that is the case. If it is not passed on, the reason for introducing the measure will no longer apply. The Minister has stated it will be monitored carefully and reviewed. It is important that all operators approach the reduction in the right spirit. It is meant to increase audiences, for example, which are declining, as many would say, because of cost and will I hope increase employment opportunities. If more people attend events and the theatre, for example, more workers will be needed to service them. What is at issue is the spirit in which the change will be implemented. If it is not implemented in the spirit intended, it may not be as effective as it should be. The Minister for Finance has made a clear commitment that the measure will be monitored. The same applies to the travel tax change if it does not work. The Government is committed to its reintroduction if the change does not benefit the taxpayer.

Robert Troy (Longford-Westmeath, Fianna Fail)
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The Minister did not outline the target for the number of jobs he hopes will be created. I have spoken to three hoteliers since the announcement was made and all of them have indicated they might not necessarily pass on the VAT reduction because they are at breaking point and looking on this measure as an opportunity to save the hotels they run a few bob, which will mean current jobs will be retained. However, the reduction will not have the desired effect in these hotels. Will the implementation of the reduction be reviewed quarterly, biannually or annually?

Jimmy Deenihan (Kerry North-West Limerick, Fine Gael)
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I am disappointed hoteliers would say that. The reduction has not yet been implemented, but if that is the spirit in which it is being taken, I am disappointed. Hoteliers and restaurateurs welcomed the reduction when it was announced in press releases by their representative organisations, but if that is the attitude that will be taken to it, it will be reviewed quickly. It is intended to drive consumer demand to get more people to use hotels. Hotel prices in Dublin and throughout the country are competitive. I acknowledge that a large number of hotels are hanging in, but this is meant to act as a stimulus. The number of additional jobs that could be generated by this initiative has not been quantified, but if there is more demand, employers will have to take on more staff to provide a service to satisfy demand. I hopefully the measure will have a positive effect in reducing the number on the live register and providing necessary jobs all over the country. Tourism has an impact on every part of the country, which is a positive aspect of the industry.