Waterford Fine Gael Senator John Cummins has welcomed the extension of the 9% Value Added Tax (VAT) rate for the tourism and hospitality industry for a further six months. The proposal was approved by Government at a Cabinet meeting yesterday. The 9% VAT rate will therefore remain for these sectors until the 28th February 2023. The estimated cost of this further extension is €250m.
This extension will cover the same goods and services as the original measure; restaurants, supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, and hairdressing, as well as certain printed matter such as brochures, leaflets, programmes and catalogues.
Senator Cummins said “The retention of the 9% VAT rate for the hospitality and tourism sector is a much-needed counter inflationary measure which will benefit both consumers and businesses. I welcome this decisive move as it gives certainty to the industry out to February 2023, it had been due to revert to 13.5% in August.
“We all know what happened over the last two years with the worldwide pandemic. Businesses closed and international tourism for 2020 and 2021 was practically non-existent. The hospitality and tourism sector suffered immensely. Now that all pandemic support measures such as Emergency Wage Subsidy Scheme (EWSS) have ended and our economy recovers strongly, it was important to give businesses have certainty out to the end of the winter next year.
“This decision will help maintain and secure future employment for many while ensuring hospitality and tourism businesses have sustainable futures,” Senator Cummins said.
“Crucially for the shoulder months beyond September 1st, this is vitally important for businesses to remain competitive for domestic and international tourists. I’m glad to see Government has responded positively to my calls and the industry’s representations on this issue. An early decision to provide certainty to all stakeholders involved is a very welcome development,” he added.
Minister for Finance Paschal Donohoe said “The tourism and hospitality sector was one of those most impacted by the public health restrictions put in place throughout the pandemic. Through no fault of their own, bars, hotels and restaurants had to close on multiple occasions to help the country make its way through the worst of the public health crisis.
The Government put in place unprecedented support for the economy with the wage subsidy scheme supporting the incomes of citizens across the country. The accommodation and food services sector was the most supported by the employment wage subsidy scheme to ensure that workers maintained the link with their employers and to give businesses the best possible chance to weather the pandemic.
The 9% VAT rate was introduced in response to the challenges posed by Covid-19 to support the hospitality sector and today the Government has decided to extend the period when the 9% rate will apply for a further six months. This will provide further support to the tourism and hospitality sectors over the busy November/December period and into the early New Year.”