Sandra McLellan (Cork East, Sinn Fein)
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Question 61: To ask the Minister for Finance if he will provide any evidence currently held by him to support the conclusion that reducing VAT in the tourism sector will create jobs and the mechanisms in place to measure the impact of this VAT reduction on job creation and retention. [18617/11]

Michael Noonan (Limerick City, Fine Gael)
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As provided for in the Finance (No. 2) Act 2011, a second reduced VAT rate of 9% came into effect on a temporary basis in respect of certain services and goods mainly related to tourism on 1 July 2011 for the period up to end 2013. Specifically the 9% rate will apply to restaurant and catering services; hotel and holiday accommodation; various entertainment services such as admissions to cinemas, theatres, certain musical performances, museums, art gallery exhibitions and fairgrounds/amusement parks, the use of sporting facilities; hairdressing services; and printed matter such as brochures, maps, programmes, leaflets, catalogues, newspapers and magazines. In reducing the VAT burden on activities related to the tourism industry, this measure is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector.

While the programme for Government included a commitment to lower the reduced VAT rate to 12% for all goods and services at that rate, the Government decided to introduce a more focused reduction. In this context, where the VAT reduction is targeted to a more select range of economic activity, a greater reduction in the VAT rate can be applied and hence increase the potential boost to that economic activity.

The VAT change announced in the Jobs Initiative will be kept under review and evaluated before end 2012 in order to determine its effectiveness in aiding the industry. Statistics are published quarterly by the CSO as part of the Quarterly National Household Survey, in relation to the numbers of persons employed in the State by gender and employment sector. These statistics, inter alia, provide details of employment levels in the accommodation and food services sector.

If it is shown that the VAT reduction has little or no effect in aiding the industry then the measure is open to being reformed or abolished.