A TOURISM GROUP has expressed “grave concern” about the scheduled return of the lowered 9% VAT rate for the industry to 13.5%. 

The special 9% rate for the hospitality sector was introduced in 2020 in a bid to lessen the impact of the Covid-19 pandemic. 

It was due to lapse in August 2022, but it was retained for a further six months. It is now due to lapse on 28 February and return to 13.5%. 

The Irish Tourism Industry Confederation (ITIC) has today urged the Government not to go ahead with the increase. 

Elaina Fitzgerald Kane, chairperson of the ITIC, said it would be “extremely detrimental to jobs, livelihoods and businesses and particularly in regional Ireland”. 

An economic report by economist Jim Power, commissioned by the ITIC last month, found that in the event of an increase in the VAT rate it is likely there would be a 10% decline in employment within the tourism sector this year. 

The report also stated that due to low margins, a VAT increase would be passed onto consumers, adding 4.1% to the price of accommodation and food services. 

“The sector was fully closed or partially closed for nearly two years during the pandemic and is at a very vulnerable stage,” ITIC CEO Eoghan O’Mara Walsh said. 

Fitzgerald Kane warned that businesses would not be able to absorb a VAT increase such are the cost pressures elsewhere. “Everything from the price of a coffee, to a lunch with friends, to a wedding venue is going to be more expensive if the VAT rate increases.

“This would run completely counter to Government’s desire to ease the cost of living. We strongly urge Government to leave the 9% VAT rate unchanged so that tourism recovery can stay the course.”

Representativesd of the tourism and hospitality sectors met with the Fianna Fáil parliamentary party on Wednesday evening, RTÉ reported.