Brendan Griffin (Kerry South, Fine Gael)
Link to this: Individually | In context

Question 49: To ask the Minister for Finance his plans for the future retention of the 9% VAT rate; if the policy is self financing to date; and if he will make a statement on the matter. [26133/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The Finance (No. 2) Act 2011 provided for a second reduced VAT rate, of 9%, on a temporary basis in respect of certain tourism-related services and goods for the period 1 July 2011 to 31 December 2013. This measure is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector.

Initial analysis of the effectiveness of 9% VAT rate indicates that employment numbers in the tourism and restaurant sector have increased, prices have reduced and Tourism Ireland is targeting growth in overseas visitor numbers in 2012. In this context I have decided not to make any amendment to the rate and have provided assurance to the tourist industry that the 9% rate will continue throughout 2013 as currently legislated for.

With regard to the financing of the 9% VAT rate, the Jobs Initiative provided for a pension levy that would offset the cost of the introduction of the 9% VAT rate. Over their lifetime, these measures were designed to be budgetary neutral and they are in line with expectations to date.