Peadar Tóibín (Meath West, Sinn Fein)
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To ask the Minister for Transport, Tourism and Sport the action he has taken to ensure that the tourism sector is delivering added employment from the 9% rate of VAT; if he will outline the effects of the changes; and if he will make a statement on the matter. [52694/12]

Leo Varadkar (Dublin West, Fine Gael)
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After the VAT reduction was introduced, I wrote to the main representative bodies in the tourism industry emphasising to them the need to ensure that the reduced rate was passed on to consumers.  Since then, I have been in regular contact with sectors within the tourism industry and I have consistently urged them to ensure that the reduced VAT rate is passed on to consumers whenever possible.

Indications to date are that the policy is working.  The CSO Quarterly National Household Survey reported that employment among accommodation and food providers increased by 6,300 (seasonally adjusted) from the second quarter of 2011 to the equivalent period in 2012.  A recent examination of the VAT rate cut by the Department of Finance found that this 6% increase in employment in the sector compared very favourably to a 3% decline in overall market services employment (excluding accommodation and food and public sector employment) in that period.  Accordingly, they estimate that there has been a net employment growth of 9% in accommodation and food services since the introduction of the reduced VAT rate compared to comparable market service sectors.  Allowing for inflationary pressures elsewhere in the economy, the evidence also shows that the VAT reduction has had an impact in terms of prices charged to consumers. I am confident that the VAT reduction has helped to sustain employment and businesses by making them more competitive.

That is why the rate is being maintained in 2013.  This is a further example of the importance that Government attaches to the tourism industry and its contribution to the economy, particularly in the context of continued pressure on the public finances.