Verona Murphy (Wexford, Independent)
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5. To ask the Minister for Culture, Heritage and the Gaeltacht what discussions her Department is currently engaged with in respect of extending the special 9% vat rate for the hospitality sector beyond September 2023; and if she will make a statement on the matter. [23703/23]

Verona Murphy (Wexford, Independent)
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My apologies for the delay but I wish to ask the Minister what discussions her Department is currently engaged in regarding extending the special 9% VAT rate for the hospitality sector beyond September 2023 with the Departments of Public Expenditure, National Development Plan Delivery and Reform and Finance?

Catherine Martin (Dublin Rathdown, Green Party)
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The Deputy has asked about the extension of the reduced 9% VAT rate for the hospitality sector. While elements of the hospitality sector are also important parts of the wider tourism ecosystem, as the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, I do not have responsibility for the general hospitality sector. However, the Minister for Enterprise Trade and Employment, Deputy Coveney, and I co-chair the hospitality and tourism forum as I said earlier, which brings together on a regular basis these two important and interrelated sectors. The Government has strongly supported the tourism and hospitality sectors through a range of physical supports, particularly during the Covid-19 period, and more recently in dealing with the challenges facing the sector.

These supports have included the retention of the lower VAT rate since November 2021, a rate which was most recently extended until 1 September 2023.

In 2021, supports from my Department included €55 million for a dedicated tourism business continuity fund, €17 million in capital investment for an outdoor dining scheme and €5 million for an urban animation scheme. In budget 2022, the Government allocated €67.6 million in additional funding for tourism of which a further €50 million was for further tourism business continuity supports.

These supports from my Department were in addition to the significant supports provided through the employment wage subsidy scheme, EWSS, and the Covid restrictions support scheme, CRSS, which were operated by the Office of the Revenue Commissioners. The Minister for Finance has responsibility for VAT rates or other taxation measures, and in assessing any proposals on such matters the balance between the costs of measures against their impact and the overall budgetary framework is a critical consideration. The most recent extension is estimated by the Department of Finance to cost €300 million.

Notwithstanding this, the Government recognises the challenging business environment within which key elements of the tourism and hospitality sectors are operating this year and the role that such businesses play in driving employment and economic activity across Ireland. That is why it was extended to 1 September.

In relation to any further extension it is clear that hotels will trade well in 2023 due to the strong demand for tourism and their role in the provision of humanitarian accommodation. I have asked my officials in Fáilte Ireland to do further work in relation to any possible mitigation measures that are needed for other tourism businesses.

Verona Murphy (Wexford, Independent)
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I thank the Minister. I absolutely appreciate all of the supports that were quite necessary during Covid, and which every other country instituted in their sectors. While I appreciate that the Minister does not have the full say, certainly I hope that as the Minister with responsibility for tourism the Minister would be a great advocate to retain this rate, particularly for rural Ireland. Many cities across Europe have a city tax for hotels. The reduction in accommodation that we have seen means we will be far more dependent on our local communities to support our restaurants and the other tourist activities. Our restaurants in particular need to remain at the 9% rate, for sure, to remain competitive. I am hearing a lot of stories in which people are finding it much cheaper to travel abroad, with an ensuing flight, to avail of a holiday they can afford. There is a competitive issue there.

Catherine Martin (Dublin Rathdown, Green Party)
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The 9% VAT rate was introduced in recognition of the fact that the tourism and hospitality sectors were among the most impacted by the public health restrictions put in place throughout the pandemic. As I said, it is extended now until September 2023. The Government has strongly supported the tourism and hospitality sectors over the past few years and in the current economic challenges, through a range of fiscal supports that I outlined, including the decision to extend the lower 9% VAT rate until 1 September. I will continue to engage with my Government colleagues on what further supports may be required.

Verona Murphy (Wexford, Independent)
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It is not unrecognised that there were significant but inadequate supports for instance the temporary business energy support scheme, TBESS. I heard a quote from a colleague of mine in New Ross, who was a former colleague of the House, Mr. Seán Connick, who is the CEO of the Dunbrody Famine Ship experience in new Ross. At the Oireachtas Joint Committee on Tourism, Culture, Arts, Sport and Media during a debate in which they were discussing the development of tourism, the TBESS, for which he had applied on a bill that was in excess of €15,000, the refund was approximately €3,600, which leaves them with a bill of €11,400 in excess of the funds that they have and which they need to find. The reality is that we are still recovering from Covid and particularly in rural Ireland attractions. That is not to say that the supports were not welcome; they were. Given what has happened in the interim, and with the war and the impact it is having, the recovery is just not quick enough. This year it will be delayed further. I ask the Minister to be the advocate for those small indigenous sectors in rural Ireland.

Catherine Martin (Dublin Rathdown, Green Party)
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As I said, I continue to engage with my Government colleagues on what further supports may be required. In the budget I did secure additional funding of €15 million for overseas marketing, after 2022's once-off pump-prime investment of €35 million. I also secured additional funding of €50 million to support a range of measures including domestic marketing. Fáilte Ireland is doing incredible work on the ground with recruitment and retention and in creating local area action plans in consultation to help with the development of the regenerative tourism scheme. A lot of work is being done here. There is also the body of work that is under way in relation to research and mitigation measures. All supports are being examined that might be needed for the sector.

Verona Murphy (Wexford, Independent)
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The 30% reduction in accommodation will equate to €300,000, just for the Dunbrody facility.

Marian Harkin (Sligo-Leitrim, Independent)
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The Deputy is out of time.

Verona Murphy (Wexford, Independent)
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Excuse me. I apologise, and I thank the Acting Chair.