Michael Healy-Rae (Kerry, Independent)
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55. To ask the Minister for Finance if an independent review will be conducted of the VAT rate increase in the hospitality sector after three months of its implementation in order to assess its impact; and if he will make a statement on the matter. [52487/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The 9% VAT rate was introduced as a temporary measure in Finance (No. 2) Act 2011, to cease at the end of 2013.  This period was subsequently extended but during last year’s Finance Bill a commitment was given to undertake a review of the 9% VAT rate. 

This Review, which was published in July 2018, assessed the relevance, cost, value-for-money and impact to date of the 9% VAT rate.  However, the Review also undertook an analysis of the estimated impact on the various tourism sectors of removing the VAT rate.  The review found there is a lack of competitiveness in the sector and that if the 9% rate were to be increased, this would likely not materially impact demand or employment in the sector.

The review found that tourism expenditure is more sensitive to income growth and the economic cycle than to price changes.  The economy is currently performing well, with high levels of employment and strong demand in the tourism sector.  Growth is also expected to continue in the medium term. This positive economic outlook means that the income channel of demand is likely to ensure that economic activity within the sectors to which the 9% VAT rate applies remains strong. 

Given the impact of an increase in the VAT rate on the hospitality sector has only recently been reviewed by the Department, there does not seem to be a case for reviewing the impact of the increase three months after its implementation.