A REDUCED VAT rate on tourism-related services and newspapers takes effect as of tomorrow and Taoiseach Enda Kenny has warned businesses to ensure they pass the rate cut on to their customers.

The cut sees VAT on a range of tourism-sector items reduced from 13.5 per cent to 9 per cent.

The Irish Hotels Federation (IHF) welcomed the rate reduction as an opportunity to boost tourism. IHF chief executive Tim Fenn said it could help improve cost competitiveness and called on all of IHF members to pass the reduction on:

It is very important that all businesses within the tourism sector pass on the reduction in VAT to customers and make it very transparent that they are doing so. We believe the initiative will provide a much-needed boost in trade with knock-on effects in terms of job creation within the tourism industry.

Ronan Ryan of the Town Bar and Grill in Dublin city centre pointed out today that the reduction only affects food prices, not drinks, but said that the reduction of tax on service charges will mean extra income for staff.

Fast food chain McDonald’s has pledged to ensure the cut is rolled out across all of its 78 Irish outlets. Managing director John Atherton said in a statement that the rate cut was “a positive initiative” and would result in greater job creation in the business “over the longer term”.