James Geoghegan (Dublin Bay South, Fine Gael)
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I thank the Minster of State and wish him well in his new brief. The context of this discussion about an accommodation levy in Dublin is really straightforward. It relates to the funding of the recommendations of the Dublin city task force. The task force identified that the capital costs to fulfil those recommendations would be between €750 million and €1 billion and that the ongoing operational expenditure would be €150 million. It is stated in the report that there are a number of ways in which the operational revenue could be generated. One is that Government buildings would pay commercial rates. In replies to questions I have asked in this Chamber, the Taoiseach has made pretty clear he is not in favour of that proposal; that one is gone. Another suggestion is in respect of congestion charges, but I do not believe they would generate the revenue, nor is it a policy designed for revenue raising. The third recommendation was the introduction of an accommodation levy.

I want to set the context of why we are even discussing this. On the Government position in respect of this levy, I have tried through parliamentary questions to establish where this is being considered. In the Minister of State's own Department, the line Minister responded to me that it could not be considered independently of our general taxation system, which is primarily the responsibility of the Minister for Finance. I agree with this.

I then asked a parliamentary question of the Minister for Finance. I received his reply today which was very helpful. His response stated:

I would, however, add that a tourism accommodation levy is not a matter I believe appropriate to my Department. It is an issue very much separate and distinct from our general taxation system...

In other Member States where city taxes and accommodation levies are applied, the levy is collected at local level, by Local Authorities, who oversee the collection and redistribution of funds for projects locally. If such a levy were to be introduced here, the same system should apply...

In conclusion, this is an important issue which is being given due consideration at the moment and further engagement is required before any decision is made.

What is helpful about this discussion is that we do not have to look far to find how a model could work. Edinburgh has introduced this following the enactment of legislation in Westminster in 2024 and Edinburgh has now imposed an accommodation levy. That is a city that all of us associate with a high dependency on tourism. It hopes to generate £50 million to fund local services and the rejuvenation of its city, which would represent one of the largest boosts to local government spend in Edinburgh. A 5% levy is imposed an accommodation providers and 2% of that levy goes back to the accommodation provider to pay for the administrative burden of having to impose the levy.

Ultimately, we are talking about a couple of euro on a sector which in Dublin city, at least, is thriving. Investment in hotels is thriving. The hotel bedroom occupancy rates are at their highest level, demonstrating the need for more hotels. At least on the recent Mastercard data we have, expenditure in Dublin has increased for the last 17 consecutive quarters so it could be weathered. Ultimately, this is about a choice. Should local property taxpayers pay? Should small ratepayers pay or should it be a combination of providers that can contribute to the rejuvenation of our city?

Seán Canney (Galway East, Independent)
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I thank Deputy Geoghegan for raising a very important issue we need to get to grips with. I am responding on behalf of the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media pending the formal transfer of functions, following Government formation.

There are currently no plans to introduce a tourist tax or visitor accommodation levy but the Minister’s understanding and his view is that the introduction of such a levy would need careful consideration given the importance of inbound tourism to Ireland’s economy, local communities and the paid visitor accommodation sector.

A visitor accommodation levy would have to take account of issues, such as who would pay. For example, would its application be limited to international visitors or would it be extended to all visitors, including domestic visitors? The geographic scope of such a measure would also be an issue for consideration. Other issues arising include: scoping, identification and collection of relevant verifiable visitor data; collection of data regarding paid accommodation providers and their bed stock; the levy collection mechanism; the levy collector; and the potential administrative impact on paid accommodation providers. How the revenue raised from such a levy could be applied would also require close examination.

It is noteworthy that the introduction of a visitor accommodation levy was proposed in Foundations for the Future, the report of the Commission on Taxation and Welfare published in September 2022 and more recently in Capital City, the report of the Dublin city task force published in October 2024, specifically for Dublin city.

The Foundations for the Future Report in recommending the introduction of an accommodation tax stated:

Accommodation or city taxes (also referred to as tourist or transient visitor taxes) are largely focused on tourism or accommodation providers, and are typically levied on short-term stays in paid accommodation.

Across Europe, including in for instance Paris, Berlin and Vienna, such taxes are applied to hotel accommodation in addition to VAT.

Such taxes have been introduced across the globe in response to tourism consumption and the pressures it places on the provision of public goods and services. Consumers are generally responsible for paying such taxes, while the accommodation facility is responsible for collecting them.

Tourists and other visitors get a short-term benefit from public goods and services, such as water and sewerage systems, utilities, waste facilities, parks, security and public safety services, without having contributed to their funding. The rationale behind an accommodation tax is to ensure that those guests contribute to the ongoing costs of providing these goods and services. Depending on their design, accommodation taxes may also make the tourism industry more sustainable by providing a revenue stream that can improve environmental and economic sustainability as well as improving infrastructure.

An accommodation tax can be regarded as an adaptation of the general ‘polluter-pays principle’ to a ‘user-pays principle’ that calls upon the user of resources (i.e. the tourist) to bear the cost in a more sustainable way.

The Capital City report included the introduction of a tourist tax as one of a range of possible funding mechanisms “that could be leveraged to support implementation of this plan ringfenced for the city.” It also acknowledged that “Any decision on fundraising is a matter for government and is outside the remit of the Taskforce.” The recommendations of the latter report in full are now being considered by an interdepartmental group led by the Department of the Taoiseach and including officials from the Department.

James Geoghegan (Dublin Bay South, Fine Gael)
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I thank the Minister of State for his reply. The introduction of any new tax or levy will never be a popular initiative. I fully acknowledge that if the Government took a decision that the way in which the recommendations of the Dublin city task force were to be funded is through the introduction of an accommodation levy, the Department and the line Minister would have a huge role in engaging with the hotel sector and the tourism sector on such a proposal. However, I think we could get buy-in from that sector. I know from my previous role as Lord Mayor of Dublin that they are just as concerned about the issue of safety in Dublin city as everyone else is. They are just as concerned about dereliction and decay as everyone else is. Notwithstanding the challenges that Dublin city faces, at the moment about 20,000 bed spaces have planning permission granted and are in the pipeline in Dublin city.

Respectfully, it is my view that if the Government, as it will be, is faced with the funding choices for these recommendations, ultimately the choice will be whether local property taxpayers should pay for the rejuvenation of Dublin city. Will smaller business ratepayers pay for the funding of the rejuvenation of Dublin city or will we find an alternative means? I do not think the approach that has been adopted in recent years where so much of the funding for our local authority in Dublin city and throughout the country is reliant upon big government block grants will work. The task force makes clear that we need a strong local authority, a strong Dublin city, which can raise its own funding and can fund the rejuvenation that we absolutely need to ensure we have a safe city and a city we can all be proud of.

Seán Canney (Galway East, Independent)
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Tourism is the largest indigenous industry in Ireland and a major driver of regional growth and employment. Visitor accommodation capacity is a key infrastructure element underpinning the tourism offering, located, as it is, in every region and county. The visitor accommodation business provides significant employment, supporting livelihoods, families and sustainable local economies. The programme for Government, Securing Ireland's Future, comprehensively sets out the Government's ambitious plan to strengthen and enhance the tourism sector, ensuring a balanced regional spread of tourism throughout the country, working to develop long-term, sustainable and well-paid careers in tourism, working with local authorities and national bodies to improve public transport options and its infrastructure to key tourism locations making travel more convenient for visitors, conducting a review of the national aviation policy to maximise the use of our airports and through many other focuses.

The Department is pursuing high-quality and high-value outcomes for tourism through the deployment of sound and sustainable policies. Within that policy framework, the Government will make decisions on any proposals emerging from the group examining the Capital City report.

The issue the Deputy has raised in the Chamber this afternoon is one of a number being considered by that working group. The Minister’s expectation is that this group will put forward a suite of topics shortly for the responsible Departments to tease out further and work up into substantive proposals, as appropriate. The Minister has advised that he looks forward to considering any such proposals that reach his desk or to making observations on any other related proposals that are brought to Government by his ministerial colleagues.