Leo Varadkar (Dublin West, Fine Gael)
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The question relates to the temporary lower 9% VAT rate that applies to a range of services in the tourism and leisure sector, including hotels and restaurants. The initiative is aimed at supporting the creation and maintenance of employment as well as helping tourism businesses to lower their cost base. This allows those businesses to offer a more competitive product offering to tourists.

Recent data from the CSO shows that prices as measured in the restaurant and hotels index are at pre-2008 levels, while the recreation and culture index shows prices are at 2006 levels. In pursuing these objectives, I was pleased to see that overseas visitor numbers increased by 6% in 2011. While there has been a marginal reduction in overseas visits in the first three months of 2012, indications from industry representative groups are positive with inquiries and advance bookings for the coming months ahead of those at the same time last year. Tourism Ireland is targeting growth in overseas visitor numbers of 4.5% in 2012.

Following recent discussions with the Minister for Finance, I can confirm to Deputy McHugh that I have obtained his assurance that the lower rate of VAT will be maintained throughout 2013 so that businesses, tour operators and customers alike can continue with their planning for the 2013 season with the assurance that the 9% rate will apply. Moreover, 2013 is the year of The Gathering, during which we hope to bring an extra 325,000 visitors to Ireland, and the lower VAT rate will be an important contribution in this regard. The maintenance of the lower rate, particularly in the context of continued pressure on the public finances, is a further example of the importance which the Government attaches to the tourism industry and the contribution it can make to economic recovery.

Joe McHugh (Donegal North East, Fine Gael)
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I welcome this announcement which is significant. As regards the reduction of 9%, when the wheel is not broken it is important not to fix it. Having spoken to many people in labour-intensive restaurants, the real difference in moving from 13.5% to 9% is whether it permits them to stay in business. That is how significant this matter is. The Minister is working on a range of measures, be it the tourist visa waiver, on which he is working with Minister Deputy Shatter, or his announcement, in an Irish Independent supplement entitled "Tee Time in Donegal", of links courses in the north west recently. He can help to create the proper environment at a political level or dimension but grassroots leadership is also required. Last weekend Daniel O'Donnell, a household name in the UK and in Ireland, opened a Daniel O'Donnell visitor centre in Dungloe. I spoke to Jim White, a former Member of this House, last weekend and he told me he will be bringing 10,100 German tourists to Donegal between now and October. Local leadership will be shown once a proper political environment is provided.

I welcome this measure. It is a good news story for people in the restaurant business. That business is labour intensive and this measure will mean the difference between restaurants staying or going out of business. It is a positive announcement.

I wish to refer to a previous question related to the traditional patterns of tourists. There is a traditional triangular tourist trail. Tourists who came into Dublin would have gone to Killarney, travelled to Galway and perhaps up as far as Mayo and then back to Dublin. That is the extent of the lifespan of the tourist trail. We have to change that and we will do it. We will look at the spin off from Derry being the City of Culture next year, our being a host port for Tall Ships Race this year and the Royal Portrush staging the Irish Open. There will be spin offs for counties such as Deputy 'Ming' Flanagan's if we start to work with our northern counterparts. Let us create a new triangular trail. Let us get tourists into Belfast, over as far as the Giant's Causeway and into Donegal. Let us be positive. A day such as today is a positive one and I welcome this announcement.

Michael Kitt (Galway East, Fianna Fail)
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The Deputy has strayed a little from the question. I call the Minister to reply.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy for the question. The reduction in the VAT rate has been successful in increasing employment in the sector and it is clear that, by and large, it has been passed on to consumers. It is important the reduced rate be continued until the end of 2013. That was always the intention. That was the announcement made at the time of the introduction of the jobs initiative and it is what is on the Revenue notice. There was some uncertainty about it earlier in the year and the tourism industry lobbied hard to make sure it had certainty on this. Having discussed it with the Minister for Finance, I am glad he is willing to allow us to give certainty in order that the industry will know what prices it will charge for next year.

Regarding the opportunities for Donegal, I agree strongly with Deputy McHugh's comments. There is a huge opportunity there to build on what is happening in the North. With the ongoing improvements on the A5, it will make it easier to get to and from the county.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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I was interested to hear the Minister mention that overseas tourist numbers have increased by 6% or 7%. How does one differentiate between visitors overseas and the hundreds of thousands of people who have left and will leave the country and come back to visit their families for a week? Is there a way of differentiating between those visitors? If there is not, the more who emigrate, the more our tourism industry will thrive in the coming years. My brother likes to come home every now and then but he is not a tourist.

Charlie McConalogue (Donegal North East, Fianna Fail)
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I too would like to commend the Minister on his decision to retain the 9% VAT rate for restaurants and the hotel industry. I point to the importance of the Minister liaising with his northern counterpart on the issue of tourism investment and ensuring tourists are attracted to visit counties such as Donegal. With the opportunities that will arise in the near future with Derry being a host port for the Clipper Round the World Yacht Race and it being the City of Culture next year, tourist offices in Northern towns will be key in directing tourists to visit those counties. It was difficult in the past to get tourists to visit the northern part of the country, understandably because of the fact that we are so close to the North and there were probably not the required interlinkages. I commend him on his golf initiative covered in the Irish Independent. I ask that in his marketing strategy he gives particular attention to the points I made.

Anthony Lawlor (Kildare North, Fine Gael)
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I welcome the Minister's announcement on the VAT rate. It was great to see the number of English tourists who were over for the racing festival at Punchestown two weeks ago. The retaining of the low VAT rate will ensure festivals such as Punchestown and race meetings around the country will benefit from it.

On Deputy 'Ming' Flangan's point, a Dublin Bus driver who drives one of the hop on hop off tourist buses told me recently that the number of tourists around the city of Dublin is much higher than it has been for the past number of years. The sort of initiative the Minister has shown today is extremely welcome.

Leo Varadkar (Dublin West, Fine Gael)
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I welcome the Deputies' comments. I do my best to keep in close contact with my Northern counterpart, Arlene Foster. We even managed to attend a rugby match in Ravenhill together two weeks ago. We try to keep in contact as much as possible. One thing I would like to see happen which has not happened yet is for Derry to get involved in the Gathering, particularly with it being the City of Culture next year and the various events that will happen in 2013. Even if Northern Ireland as an entity does not get involved in the Gathering, perhaps Derry might decide do so on its own bat. That would be positive for Derry and Donegal.

On Deputy 'Ming' Flanagan's question, we do get a breakdown of such visitors. It comes later in the year. The numbers are broken down into holidaymakers, business tourists and VFRs who are people visiting friends and relatives. What we cannot break down within the category of those visiting friends and relatives is how many of them are returning migrants and how many of them are people who have moved abroad perhaps permanently who come back to visit friends and relatives. We know they bring money into the economy, spend money here and they go to events and attractions and so on.