Independent Ireland leader, Michael Collins declared today their intent to present a motion in the Dáil tomorrow. This motion advocates for an immediate reduction in the VAT rate to 9% for the broader hospitality sector, and a further reduction to 5% specifically for providers in the rural tourism and hospitality industry.
“The Government’s decision to hike the VAT rate on the sector last year was ill-judged and ill-advised,” said Collins. “The 9% VAT rate should be restored without delay, particularly to support food-related businesses which have seen insolvencies more than double in the first three months of the year.”
Collins further noted that the aim of reducing VAT is to lower consumer prices, stimulate demand, and boost employment in the sector. “VAT, being a regressive form of taxation, can impact lower-income households, especially when it comes to discretionary goods like hospitality and tourism,” he added.
The hospitality sector, in this instance, includes businesses like hotels, bars, pubs, canteens, hairdressers, barbers, catering operators, hostels, bed and breakfasts, caravan parks, self-catering accommodations, and guest houses.
Collins highlighted the significant contribution of the hospitality and tourism sector to the State’s finances, both directly through employment and indirectly through income tax and VAT. “Excluding Denmark, Ireland’s VAT rate of 13.5% for the tourism and hospitality sector is the highest in Europe,” he pointed out.
We are calling on the Government to promptly reduce the VAT rate for the entire tourism and hospitality sector to 9%, considering the imminent summer tourism season and the sector’s financial strains. They also urge the Government to permanently establish the VAT rate at 9% from Budget night in the context of Budget 2025.
“In the context of Budget 2025, we also call for varying VAT rates across the country in the hospitality and tourism sector to promote regional balance,” Collins stated. “This includes the introduction of a reduced 5% VAT rate for areas outside Dublin, thereby creating a distinction between the VAT applied in rural areas and the capital, ensuring that rural areas are subject to a VAT rate no greater than 5%.”
“This policy must address numerous growth challenges, including: