Tuesday, October 8, 2013

RAI Campaign: Keep Vat 9%

Earlier this year the Restaurant Association of Ireland launched the Keep VAT at 9% campaign calling on the Government to retain a measure introduced in 2011 which saw the reduction of VAT to nine per cent in the tourism sector.

The Restaurant Association of Ireland (RAI) told a meeting for the Oireachtas Committee on Jobs that some 9,000 jobs were created in the sector since its implementation. Keeping VAT at 9% clearly benefits the hospitality and tourism sector which has knock on effects on those linked directly and indirectly to the industry.

Reasons 9% VAT Is Important To Retain (Source: Keep VAT 9)

1. There were approximately 15,000 jobs created in the restaurant and tourism industry since the VAT reduction in July 2011.

2. It is anticipated that an estimated 5,000 jobs will be created in next 12 months if 9% VAT remains in place.

3. The restaurant sector employs 64,000 people which accounts for 1 in 4 tourism jobs pumping a total of €2 billion to the Irish exchequer annually.

4. The creation of 15,000 jobs has resulted in savings to the exchequer of €205 million to the Social Welfare bill. This figure has been calculated by taking 15,000 people off the live register. In monetary terms, this means 15,000 people contributing PAYE, PRSI and 15,000 more people contributing to keeping the Irish economy flowing through pumping money back into the economy.

5. The 9% VAT rate does not cost the exchequer €350 million as estimated by the Department of Finance. A recent report from Deloitte / Fáilte Ireland and a separate submission report from Irish Tourism Industry Confederation (ITIC) found the cost was actually €90 million (source: CSO).

6. The reduction in VAT has been passed on to consumers with evidence based on the Department of Finance analysis of the effects of the VAT change, published last December and based on CSO data for the period up to June 2012.

7. Tourism has benefited from the improved value for money perception across all overseas visitors as well as Irish consumers.

8. By European standards, Ireland is at the higher end of the VAT rate, with countries such as Portugal at 6%, France and Germany at 7% and Greece at 6.5% making Ireland less competitive as a tourist destination.

9. Renewed growth in overseas tourism numbers and earnings means overall trips to Ireland for the first seven months of 2013 were up by 6% compared to the same period in 2012 (source: CSO 2013).

Support The Campaign:

- Support the campaign by lobbying your local politicians in your constituency here. (Any replies which I have received are posted with permission below).

Change your avatar on twitter to the #KeepVAT9 avatar.

- Be part of the first virtual flash mob organised by Idaho Café on Wednesday 09th October at 9pm more here.

Michael McGrath T.D.
Dear Dermot,

Thank you very much for your email.

There should be no suggestion of a threat to the 9% Vat rate in 2014 given that it has already been funded by the collection of the 0.6% pension levy in 2011, 2012 and 2013. In addition, the government intends to collect this levy again in 2014 (before abolishing it). In total, the pension levy will bring in close to €2 billion - considerably more than the cost of reducing the lower rate of Vat to 9% for the hospitality sector.

Therefore, there is no excuse whatsoever for the government not to continue with the lower rate in 2014.

We are following this up at a political level in the Dáil.

Kind regards,

Michael McGrath T.D.