John Perry (Sligo-North Leitrim, Fine Gael) | Oireachtas source

As regards the 9% VAT rate, it is important to note that every reduction costs a considerable amount of money. As to the numbers employed in the tourism sector, research was carried out by the Department and published in the medium term fiscal statement in November 2012. This report entitled Measuring the Impact of the Jobs Initiative examined where the VAT reduction had been passed on and where jobs were created. It contains detailed information on the impact of the 9% VAT rate on prices and employment numbers. The report is available on the website.

Using the statistics from the CSO, the report indicates that an additional 6,200 jobs have been created in the accommodation and food sectors for Q2 2011, and there was an increase of 6% in Q2 2012. While other factors impact on employment rates in these sectors, I have no doubt the 9% VAT rate has contributed in no small way to those employment gains. Furthermore, these figures underline the positive impact of the 9% VAT rate as comparable sectors experienced a decline in employment numbers over the period concerned. This indicates that employment in the accommodation and food sectors may also have declined without the introduction of the 9% rate.

With regard to prices in the tourism sector, the response to the 9% VAT rate has been positive. The report indicates that the VAT reduction was for the most part passed on to consumers. While tourism numbers fluctuated over the period since the introduction of the 9% rate in July, expenditure by overseas travellers in Ireland in 2012 increased by €37 million over 2011. This excludes transport and air travel costs which are exempt from the VAT rate.