Charles Flanagan (Laois, Fine Gael)
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I move:

(1) THAT the 9 per cent rate of value-added tax which is provided for in subsection (1)(ca) of section 46 of the Value-Added Tax Consolidation Act 2010 (No. 31 of 2010) and which applies to the supply of goods and services referred to in paragraphs 3(1) to (3), 7(b) to (e), 8, 11, 13(3) and 13B(1) to (3) of Schedule 3 to that Act, be increased to 13.5% and that the Value-Added Tax Consolidation Act 2010 (No. 31 of 2010) be amended accordingly.

(2) THAT this Resolution shall have effect on and from 1 January 2019.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution provides for an increase of the VAT rate to 13.5%, with effect from 1 January 2019, on all services and goods to which the 9% rate currently applies, with the exception of newspapers, periodicals and sporting facilities. The proposed change will apply to catering and restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter, hairdressing, the sale of live horses and greyhounds and the hire of horses. The increase is estimated to raise €466 million in 2019 and €560 million over a full year.

The 9% VAT rate was introduced as a new temporary reduced rate as part of a jobs initiative from July 2011 to December 2013. It was aimed at boosting tourism and at the creation of additional jobs across that sector. From budget 2014 it was decided to retain the 9% rate to support increased numbers of jobs and, latterly, due to the weakness of sterling following the UK vote to leave the European Union.

During last year's Finance Bill, the Minister for Finance committed to undertake a comprehensive study of all aspects of the 9% VAT rate to better inform any decision on the reduced rate. The review of the 9% VAT rate, analysis of economic and sectoral developments published in July, assesses the 9% VAT rate's relevance, its cost, value for money, impact to date, and the estimated impact were it to be removed. This matter was debated at an appropriate Oireachtas committee. The review found that tourism expenditure was more sensitive to income growth and the economic cycle than price changes, which reduced the relevance of the VAT rate applying to the sector. The review found that there was a lack of competitiveness in the sector and that if the 9% rate were increased, it would likely not materially impact demand or employment in the sector.

With economic analysis indicating that there is a decline in competitiveness across the sector, that the majority of activity at the 9% rate is driven by income growth more than price, and that the retention of the rate provides little additional benefit relative to its cost, the Minister has decided to return these items to the 13.5% rate. In the case of newspapers and sporting facilities, however, VAT will be retained at the 9% rate to assist national and regional newspapers to remain competitive and to meet the challenges of the modern media landscape. The 9% VAT rate is being retained for sports facilities to encourage healthy activity through facilities remaining affordable across the sector.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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While it is widely acknowledged that things have been booming in the Dublin area, we must be mindful of small hotels in rural parts of Ireland which will not have beds full tonight and which struggle during the week especially. We must also be mindful of restaurants. We ought also to take into account that we are trying to keep people visiting here from England as tourists. It is not a good idea to put added costs on top of them. I am fearful for the small operators who are struggling. I acknowledge that tonight, in Dublin, one probably would not get a hotel bed and those hotels are charging pretty strong prices. However, it is like a weighing scale where one might put a few pounds on one side but the other drops. It may be detrimental to rural parts of Ireland.

Pat Gallagher (Donegal, Fianna Fail)
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Deputy Peter Fitzpatrick was the next to indicate. I remind the House that we will try to accommodate everyone.

Peter Fitzpatrick (Louth, Independent)
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It was widely reported that the VAT measures introduced some years ago to help tourism and hospitality would be reversed and, unfortunately, that has proven to be the case. Today, the Minister stated that tens of thousands of extra jobs were created in the tourism sector since the measure was introduced in 2011 and that the sector has never supported more employment than it does today. It supports 240,000 jobs and provides balanced regional growth, as the Minister confirmed. Why would the Government threaten this by reversing a measure that was designed to protect and support our tourism sector? It makes no economic sense.

The Minister stated that this increase will allow him to reduce his reliance on other taxes, such as corporation tax, and prevent increases there. The Government wants to increase the costs of local indigenous businesses so that we do not have to increase taxes on companies which pay the lowest rate of corporation tax in the EU.

I was very disappointed when the Minister did not acknowledge the threat of Brexit to the tourism sector, especially along the Border area. There is no doubt that Brexit will be a great challenge to tourism. Now, more than ever, it needs all the support and help to maintain its growth.

Coming from the constituency covering Louth and east Meath, I know better than most the value of a thriving tourism sector. My constituency has some of the best tourist attractions in the country. The Carlingford Peninsula in the north of the county has attractions such as Carlingford village, the Cooley mountains, many walking routes and a new greenway from Carlingford to Omeath.

Seán Sherlock (Cork East, Labour)
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We are getting a tour of Louth.

Peter Fitzpatrick (Louth, Independent)
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Further south there are the historic towns of Dundalk and Drogheda, the many attractions of the Boyne valley and the seaside villages of Laytown and Bettystown. These areas suffered greatly when the economy collapsed and we faced years of austerity. Now we have the threat of Brexit which will be particularly felt in Border areas.

The 9% VAT rate has been critical to Louth and east Meath's tourism success, having brought Ireland more closely in line with the tourism VAT rates in the European countries with which we compete. Tourism is one of our largest indigenous industries and is essential for prosperity and economic well-being. I have always advocated for keeping the VAT rate at 9% and will continue to do so.

As the UK plans to leave the EU, there is a level of uncertainty about what Brexit means for many things and we must consider what it will mean for the future of our tourism and hospitality sectors. We are still in the process of achieving sustainability, and much of our tourism and hospitality is seasonal. We rely on tourism from the UK market, with tourists from the UK being our largest overseas market. As the euro has grown more expensive relative to sterling, visitors are spending less.

Since the announcement of Brexit in 2016, the number of UK visitors has reduced. The UK market presents a challenge. With that in mind, I cannot understand or agree with the decision to reverse the VAT rate from 9% to 13.5%. The measure was a great help to the tourism sector at the time of its introduction and I firmly believe it should be retained to help it to cope with the undoubted fact that Brexit is looming. I, for one, cannot support the proposed measure and will not be voting in favour of it.

Pat Gallagher (Donegal, Fianna Fail)
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Next up is Deputy Michael Healy-Rae. Let us try to confine contributions to two minutes to give everyone an opportunity to speak.

Michael Healy-Rae (Kerry, Independent)
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I will do my best, but this is an important subject. In the past few weeks and months I have certainly been contacted by many people who are working in the sector and who tonight have been left reeling by the decision to provide for a massive increase from 9% to 13.5%. It will hit the most vulnerable because it is the smaller businesses involved in the tourism and hospitality sector which will be most adversely affected. They have been contacting me all evening to state they cannot believe the Government would do this. I must say to the Minister of State at the Department of Transport, Tourism and Sport, Deputy Brendan Griffin, a colleague of mine from County Kerry who will be aware since he entered politics that I never criticise if I do not have, that it is ironic that a Minister with responsibility for tourism who comes from County Kerry can agree to this measure. It is ironic that he has agreed to vote in favour of it tonight and hurt small business people on the Ring of Kerry who, as he knows every bit as much as I do, work so hard to keep their doors open. They are creating employment in local areas. I am not talking about big business but about small hotels, guest houses and restaurants. I am talking about people who are trying to keep their doors open. Tonight they are fearful that this massive increase will prove detrimental to them. That is why I am so disappointed that it is being allowed to happen.

Brendan Griffin (Kerry, Fine Gael)
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The Deputy did not support the measure from day one.

Pat Gallagher (Donegal, Fianna Fail)
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I am trying to get everyone in and ask the Minister of State to refrain from interrupting.

Brendan Griffin (Kerry, Fine Gael)
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It was merely a point of information.

Pat Gallagher (Donegal, Fianna Fail)
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The Minister of State can play in Fitzgerald Stadium.

Brendan Griffin (Kerry, Fine Gael)
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Deputy Michael Healy Rae did not support the measure from day one. It is complete hypocrisy.

Pat Gallagher (Donegal, Fianna Fail)
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If the Minister of State is here to represent the Government, I will give him an opportunity to speak. I will put him on the list.

Michael Healy-Rae (Kerry, Independent)
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I heard the word "hypocrite" being used. I will put it this way. I am keeping my word to the people of County Kerry who lobbied and asked me to make sure the VAT rate would not be increased from 9% to 13.5%. I will not drive a nail into their coffin. I will do everything I can to support them, as I always have done. It is a retrograde step to see Deputies, especially from rural Ireland, not only County Kerry, voting in favour of this increase. It will hurt small businesses, especially in rural Ireland, at a time when we should be trying to keep them going.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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I will be brief in order that as many Members as possible will be able to speak.

This measure goes too far. No doubt, as has been said, the hotel sector in Dublin is booming. One of the difficulties, however, is that one cannot have a regional VAT rate outside Dublin. Therefore, we must look at it in the round. The difficulty my party has is that the measure is being extended across the sector. It is not only for hotels that the rate is being increased to 13.5%. It is also being increased for local hairdressers, cinemas, museums, restaurants and cafés. For us, that is a step too far and it is being done in one big jump. Many of the businesses about which I am talking are small and family-owned and it is too much in one year to jump from a rate of 9% to 13.5%. For these reasons, we cannot support the proposal. In saying that, we understand the hotel sector in Dublin is booming. One cannot even find a room in which to stay. Even in the past 12 months, prices have doubled. Therefore, we would fully support reverting the rate back to 13.5% for the hotel sector. However, extending it across the entire sector is a retrograde step, one we cannot support. We will be voting against the proposal.

Mattie McGrath (Tipperary, Independent)
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My first question is for the Minister of State, Deputy Brendan Griffin. Where is the Minister for Transport, Tourism and Sport, Deputy Shane Ross? This is of his making. He is supposed to be the Minister with responsibility for tourism, but he knows nothing about the country. Dublin might be booming but the country outside it is not. I refer to the small publican who serves food, as well as small businesses and small and bigger hotels. In any town in County Tipperary, on any night of the week, bar the weekend, one could park a train or drive it on the street as there are no cars. Rooms are not full. It might be a different story in Dublin. Has the Minister gone to see the granny flat or mind his granny? Where has he gone tonight that he is not here to move the resolution? It is his area of responsibility. He is supposed to be Minister with responsibility for tourism, of which, like everything else, he is making a damn bad job. First, he tried to penalise people in rural Ireland in driving. Now this is a total negation of duty.

I, too, am surprised by the Minister of State, Deputy Brendan Griffin. I do not want to be personal, but as a Minister of State who comes from the country, he will be aware of how difficult it is in rural Ireland. He will be aware how important is the 9% VAT rate. The figures which show the boost it gave tourism - I was given them today - are significant. There was talk during the week that the Government might increase it by two percentage points, but increasing it by four and a half is scandalous. The Minister of State came to Lismore to launch the Munster Vales for us in County Tipperary, west Waterford and east Limerick. We are trying to promote tourism, of which this proposal flies in the face. It shows that the Government does not care about rural Ireland, especially small business people and hoteliers. Look at all of the employment, including summer jobs, created. Look at all of the people who are gaining work experience. This was a measure that worked. Why fix it if it is not broken? It is a pure negation by the Independent Alliance. Its members leaned over and had their bellies rubbed. Is the Minister receiving €50 million as a kind of slush fund to spend on vanity projects? No doubt they will be all in south Dublin or parts of the plush suburbs. They will not be in County Tipperary or County Kerry. It is disgraceful that he has been given a sop of, as I said, €50 million. This measure should have been left alone, or perhaps the rate could have been increased by one percentage point and in time increased incrementally. The studies are available. They show that it was successful. It is a disaster for rural Ireland.

Pat Gallagher (Donegal, Fianna Fail)
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The informal agreement is that Members have two minutes each.

Brian Stanley (Laois, Sinn Fein)
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The increase is too severe. A rate of 13.5% for hotels is fair enough as we all are aware that hotels, not only in this city but also in large towns and other cities throughout the State, have increased their prices dramatically. The 9% rate has served its purpose. In fact, we have arrived at the point where the hotel sector is booming. However, I am surprised at the Minister for Justice and Equality, Deputy Charles Flanagan, proposing this measure for the restaurant sector as someone who represents the rural constituency of Laois-Offaly. The fact is restaurants and cafés in counties such Laois and Offaly are struggling because of high costs. Hairdressers are also struggling because of high costs. The Minister will be aware, as he must be, hearing it like I do from those who work in small businesses such as cafés and hairdressers in towns in our constituency such as Mountmellick, Portlaoise and Mountrath, that they have faced significant increases in rates, water charges and energy costs. Energy costs went up while we were all off for the summer. The energy companies shot up their prices by as much as 6% or 7% when nobody was looking. This increase is happening at a time when these businesses are under severe pressure.

Fine Gael is supposed to be the party of small business. Is it the party of big business because small businesses are taking a hit? What we, in Sinn Féin, are saying clearly is that going to a rate of 13.5% for hotels is fair enough, but other businesses in this sector such as hairdressers and cafés simply cannot take a 50% increase in the VAT rate. We propose that the rate rise to 11%, an increase of two percentage points. That is as far as it should go as that is as much as they can absorb. I am sure the Minister has been lobbied on the issue, as I have been. It is not fair on small businesses in counties such as Laois and Offaly that this is happening. I propose that the rate be 11% for these businesses.

Danny Healy-Rae (Kerry, Independent)
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This is a savage attack on rural Ireland. Dublin and the big urban centres are not hurting. This a direct attack on small businesses in County Kerry. If one looks at any part of the Ring of Kerry or any rural area in County Kerry where there is a small guest house, bed and breakfast accommodation and a small restaurant, one will see that they will struggle to keep the doors open between now and St. Patrick's Day. They face an uphill struggle and things are bad enough without hitting them with this savage tax as they have no way of making the money up. They cannot increase their rates because they would not be competitive. They still have to pay their employees.

As I said earlier in the day, when one is an employer Friday evening comes very fast and one must find the money to pay everyone. I am very surprised by what has happened. I believed we were safe when we had a Minister of State from my constituency. I did not or would not expect anything from the Minister for Transport, Tourism and Sport, Deputy Ross, because he is totally against rural Ireland. I cannot understand what has gone wrong with the Government because it was the reduction in the VAT rate that bailed out the sector and helped it to survive and keep going.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Carol Nolan.

Danny Healy-Rae (Kerry, Independent)
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They were just getting level and starting to get on their feet but now they are being trounced back down again.

Pat Gallagher (Donegal, Fianna Fail)
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If I were unreasonable I could allow somebody to speak for the next 20 minutes. We must take the vote at 12 o'clock. I just ask Members to be reasonable. It is in their own interest. I ask for an informal agreement that each Member should have about two minutes.

Carol Nolan (Offaly, Independent)
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The proposal to increase the VAT rate to 13.5% is extremely unfair. I do not support any VAT increase, particularly in rural counties, regardless of whether it is the 11% rate proposed by some parties or 13.5%. It is extremely unfair.

I have been contacted by many owners of small businesses from counties Laois and Offaly and learned that they are absolutely struggling to pay rates and to meet ever-rising insurance costs. The Minister, Deputy Flanagan, will know this from his town, Mountmellick. I have heard many concerns coming from there also.

The proposed measure will have a serious impact on the progress that has been made. It is slow progress in regional areas. We are not making the same progress as areas such as Dublin, which was mentioned. We have the Hidden Heartlands tourism strategy but it is in its infancy. We do not know with certainty whether it will work. Therefore, it is an absolute insult to small businesses to turn around and slap them with this measure when they are struggling to keep their doors open every day. Many restaurants and hotels in rural areas, particularly in regional areas such as Laois and Offaly in the midlands, will struggle. Only earlier this week, Gerard Brady, head of tax and fiscal policy in IBEC, expressed serious concern over the proposed measure, stating that higher prices when consumers are facing rising costs will lead to fewer customers and lower expenditure among those customers who are spending. The increase will be absorbed in urban areas but not in rural areas, which are struggling.

Declan Breathnach (Louth, Fianna Fail)
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I commend the sector, which lobbied hard, certainly on social media, not to have this issue before the House tonight. What is being experienced by the sector in rural areas is not being experienced elsewhere, particularly Dublin. I refer in particular to the food sector. It is inevitable that this resolution will be passed tonight but I appeal to the Minister for Finance, who, unfortunately, is not here, to bring about some form of remission or to carry out a review of rates in conjunction with the measure. I cannot wait for the new rates Bill to be introduced in the House. It will allow people to pay on the basis of ability or accrued income where they are making profits. The industry is struggling in the Border region. I firmly believe the move is the wrong one.

I wish to comment on the support for local newspapers. I understand the logic to the argument about their survival. It is very difficult coming from a Border constituency to understand why I can buy a newspaper for £1.30 in Newry when that same newspaper costs €2 in this jurisdiction. There is something wrong with the system and it needs to be addressed, particularly in regard to cross-Border development and tourism in the Border region.

Brendan Howlin (Wexford, Labour)
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The 9% VAT rate was brought in initially by me and the former Minister for Finance, Deputy Michael Noonan, as a job creation effort in 2011.

Charles Flanagan (Laois, Fine Gael)
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Temporary.

Brendan Howlin (Wexford, Labour)
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It worked. It was funded by a very unpopular levy on pensions, over which the Minister will recall we were beaten up. It worked as a job creation effort. It is now clear that there are very large hotel groups coining money that do not need a taxpayers' bailout but there are a number of others who will be affected by this measure. I refer to small family restaurants, small family hotels, small operators in the hairdressing industry and so on who need the support of countervailing measures.

The Minister will have very broad support across the House in regard to the big hotel groups that are coining money but we do need to have specific measures for the others. Before this measure takes effect early next year, there will be time to introduce supportive measures to ensure the family enterprises are not hit. They need to be assured tonight that they will be helped out when this measure is introduced in January.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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This is a really retrograde step. I have spoken about it to restaurateurs in particular. I spoke to restaurateurs in Ballinasloe only yesterday and to those in other parts of my constituency, including Strokestown, Castlerea, Carrick-on-Shannon and Termonbarry. All of these people pleaded with me not to allow the rate of VAT to increase to 13.5%.

There was great enthusiasm in recent months when the Hidden Heartlands initiative was announced. There was a real feeling in the community that it represented a new beginning. However, this has been very much dampened today by this announcement. Like Deputy Brendan Howlin, I ask the Minister for Justice and Equality to go back to the Government with this issue, even if the result is an increase of 2%. The increase will mean jobs will be lost. We must take account of the fact that smaller restaurants and small family hotels have faced significant increases in insurance costs. Their premiums have increased by more than 100% in recent years. Revaluation has taken place. These people are struggling. This is the last thing they want. There is no doubt that part-time jobs, which have been very important to the rural areas, will go. Again, I appeal to the Minister strongly to go back to the Government and at least try to do something in regard to this matter. It is serious.

Pat Gallagher (Donegal, Fianna Fail)
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I remind the other Members that, given the number who still wish to contribute, there may not be time for the Minister to respond. If they could speak for about a minute and give the Minster time to respond, there will be sufficient time. Otherwise, they will not have time. It is not a matter for me; it is the House that decided this.

Kevin O'Keeffe (Cork East, Fianna Fail)
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It is ironic that the Minister for Transport, Tourism and Sport, Deputy Shane Ross, and other members of the Government have tried to tell us in the brief period in which I have been a Member of the Dáil that they cannot differentiate legislatively between rural Ireland and the greater urban area of Dublin. On this issue, we are told there cannot be a different VAT rate for rural areas and Dublin because of the legal implications. It is ironic that the Government can hide behind the legislation stipulating we cannot have separate tax arrangements for rural areas and Dublin. Did the Government not examine alternative taxation arrangements?

Down through the years, many small hotels thrived on the profit from nightclubs. The nightclubs are doing no business now.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Pat Buckley.

Pat Gallagher (Donegal, Fianna Fail)
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Deputy Ferris, you are a long-standing Member of the House and you know you address the Chair. Deputy Buckley has one minute.

Pat Buckley (Cork East, Sinn Fein)
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I can say a great deal in one minute. First, I wish to be associated with all the comments of the Sinn Féin Deputies. Members have spoken repeatedly about the effect this will have on small businesses and particularly on rural Ireland. There has already been the issue with the post offices. I will repeat what I said here last week. Fianna Fáil Members are speaking out of both sides of their mouths. They are whingeing and playing the violin today. They are hurlers on the ditch. I call on them to have the balls to oppose this tonight, if they have the balls.

Pat Buckley (Cork East, Sinn Fein)
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They are hiding behind the blue buttons. They do not have the balls.

Pat Gallagher (Donegal, Fianna Fail)
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Deputies, restrain yourselves. You got your opportunity and there are other Members who wish to address the House. Deputy Michael Collins has one minute.

Michael Collins (Cork South West, Independent)
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West Cork is reeling in shock after this news today. It is an increase not of 1% or 2% but of 4.5%. It is an absolute disaster for rural Ireland. This budget has turned its back on rural Ireland just as previous budgets did. Who else is running the show here? It is the Minister, Deputy Ross. That Minister has already turned his back on the people of rural Ireland. He has been doing it for the last number of months and he is doing it again. He did not protect the rural people who have hotels that have to close down during the winter. How does he expect them to stay open or to continue to create employment? I ask the Fianna Fáil Members not to abstain on this issue but to vote against it and vote for the people. All of us should vote against this measure tonight.

Mick Wallace (Wexford, Independent)
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I declare that I have an interest in the restaurant industry. The Government does not understand how VAT affects the food and restaurant industry. Only the big restaurants will benefit from this. One could not defend the hotels given the prices they have charged for hotel rooms in Dublin for some time. However, I know many restaurants that will struggle to survive after this change. I know from our own books and how it works that this will be a problem, and it is not confined to rural Ireland. The small restaurants of Dublin will struggle to make ends meet with this new arrangement. The food industry is different and the Government has not come to terms with how it works. This will do serious damage.

Seán Sherlock (Cork East, Labour)
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Given that I only have a minute and the fact that this resolution will come into effect from 1 January 2019, I ask the Government to look at this again in the Finance Bill. It is clear there will be unintended consequences as a result of the proposed implementation of this measure. We have been contacted throughout the evening by many people from all the sectors that have been discussed tonight, ranging from restaurants to barber shops to hairdressing salons. It is clear that it will have a massive effect whether one lives in rural Ireland, a large urban conurbation or a middle sized town. Will the Government review this or is there any scope for examining it again so we can have a wider debate? The debate should not be condensed into mere minutes as it has been tonight. I accept that you, a Leas-Cheann Comhairle, must organise the business in this way.

Pat Gallagher (Donegal, Fianna Fail)
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Thank you for taking your colleagues into consideration. Deputy Martin Kenny is the last speaker before I call the Ministers to reply.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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We all understand the situation in Dublin and in many urban centres where hotel prices have gone out of the reach of many people who wish to stay in them. However, tourism in the north west was down 16% last year, so there are parts of the country where there are problems. We recognise that it cannot be applied geographically and must be applied across the board. Therefore, it is appropriate to increase it to 13.5% for the hotel sector, but we believe 11% is far enough for the restaurant and other sectors. The Government needs to examine the areas that are under stress, particularly the Border counties where there are problems due to Brexit. It must provide more funding there and, perhaps, consider a means of providing for a break for hotels in other areas, particularly through local authority rates. That could be considered later in the Finance Bill. It must be addressed.

Fianna Fáil must step up to the mark on this. Its Members cannot continue to hide behind the blue button.

Brendan Griffin (Kerry, Fine Gael)
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I acknowledge the massive lobbying that took place over the last number of months by people in the industry, people I work with every day. I also acknowledge the challenge this change will bring for many people around the country. However, this rate was introduced by the Government as a temporary measure in 2011 for three years. Many of us fought hard in 2014 to have it extended and again in 2015, 2016 and last year. We were unable to get it extended this year. Meanwhile, some of the Members who are shouting the loudest on the other side of the House tonight are the same people who did not support it on the first day. That is completely hypocritical and misleading.

With regard to supporting the industry, particularly in Border, peripheral and rural areas, such as the rural community I come from, there was a good news story in the budget today for tourism. There is a 25% increase in the amount of money provided for tourism spend in 2019. Nobody is talking about that tonight. That is an unprecedented increase in tourism spend. It will be targeted at rural communities, increasing the regionality and seasonality of the tourism industry and managing the current unprecedented success in Irish tourism.

Joan Burton (Dublin West, Labour)
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How much is it?

Brendan Griffin (Kerry, Fine Gael)
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If we do not manage the tourism industry properly there will be a bubble scenario where we could potentially see a crash in the industry. We have seen it happen previously and there is nothing to suggest that we will not see it again.

Those who are charging more will pay more. The hotel in Dublin that is charging €400 for a room will pay an additional €18 as a result of this measure. The hotel in Belmullet, west Clare or south Kerry that is charging €59 will pay €2.65 extra. Yes, it is a charge the hotel would prefer not to have, but those who are charging more will pay more under this. I am confident that the package of supports for tourism that will be put in place as a result of today's budget in terms of domestic product development, sustainable development and international marketing will return a significant extra amount for Irish tourism and will allow us to sustain the tourism industry into the future so future generations will benefit from it.

Charles Flanagan (Laois, Fine Gael)
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I acknowledge the expertise of the Minister of State, Deputy Griffin, in this regard. Many of the Deputies who have spoken on this issue have made a contribution to this debate each year over the last six years. As the former Minister, Deputy Howlin, conceded, this measure was designed as a temporary measure in a time of economic and social trauma. It was under review in every budget from 2014 to 2017. This time last year, the Minister for Finance committed to carrying out an impact assessment of a reversal to the original VAT rate. We have seen that assessment and it does not point to the sky falling in or to the disaster for rural Ireland that was mentioned by the Deputies. In fact, with regard to bed and breakfast accommodation, over three quarters of registered bed and breakfast accommodation providers are not in the VAT regime and do not pay any VAT. I do not subscribe to the argument of the sky falling in.

In response to the Deputies who have sought support for tourism related businesses in rural Ireland, the Government has allocated a further €35 million to the Department of Transport, Tourism and Sport to provide more targeted supports for the sector. That will bring the total expenditure of the Department to €168 million. This allocation, in the form of targeted supports, will ensure that small businesses in the entertainment industry in rural Ireland will benefit. It will ensure that bed occupancy and seat occupancy in restaurants can be improved.

I acknowledge the success of the Wild Atlantic Way and Ireland's Hidden Heartlands, which is only beginning to impact on a part of the country that has not benefitted to any great extent from tourism endeavours. I welcome the money allocated today for the development of greenways and blueways throughout the country, which will add significantly to the tourism footprint in other parts of the country - Ireland's Ancient East, for example. The impact on rural tourism of the increase in VAT-----

Pat Gallagher (Donegal, Fianna Fail)
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As it is midnight, I must interrupt the Minister.

Charles Flanagan (Laois, Fine Gael)
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I acknowledge the temporary nature of this-----

Pat Gallagher (Donegal, Fianna Fail)
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If the Minister continues, I have a problem.

Charles Flanagan (Laois, Fine Gael)
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We are now reverting to the pre-2011 rate .

Charles Flanagan (Laois, Fine Gael)
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12 o’clock

I acknowledge the success of the Wild Atlantic Way and Ireland's Hidden Heartlands, which is only beginning to impact on a part of the country that has not benefitted to any great extent from tourism endeavours. I welcome the money allocated today for the development of greenways and blueways throughout the country, which will add significantly to the tourism footprint in other parts of the country - Ireland's Ancient East, for example. The impact on rural tourism of the increase in VAT-----

Pat Gallagher (Donegal, Fianna Fail)
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As it is midnight, I must interrupt the Minister.

Charles Flanagan (Laois, Fine Gael)
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I acknowledge the temporary nature of this-----

Pat Gallagher (Donegal, Fianna Fail)
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If the Minister continues, I have a problem.

Charles Flanagan (Laois, Fine Gael)
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We are now reverting to the pre-2011 rate .