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VAT's The Key Says Fáilte Ireland

Less taxing times in the hospitality sector have helped created 30,000 jobs since 2011, according to a report published by Fáilte Ireland.

The Deloitte-conducted research for Fáilte Ireland assessed the impact that the 2011 VAT reduction (from 13.5% to 9%) on targeted tourism-related categories had for the hospitality sector.

Among the positive developments in the sector that Fáilte Ireland is correlating with the VAT reduction is the increase in employment in targeted sectors of 30,000 over the past three years.

Fáilte Ireland also says that price pass-through of the rate reduction to consumers is evident across almost all categories. Renewed and sustained growth in overseas tourism and earnings is also attributed to the VAT reduction.

The report argues that the attendant job creation in the tourism sector saved the Exchequer around €165m between additional income tax and social welfare.

Additionally, the tax foregone through the implementation of the rate reduction is below initial estimates. For the first 12 months of the measure, there was a net reduction in VAT receipts for the 9% categories of €100 million. The report also shows that there has been a stabilisation of VAT receipts since September 2012.

Shaun Quinn, Fáilte Ireland's CEO, says that tourism in Ireland is reaping the benefits of the VAT stimulus. “Given the ability of tourism to generate revenue and jobs for regions away from the major technological and industrial hubs, the significance of this initiative is doubly important.”

Deloitte's report for Fáilte Ireland is available here. (August 2014)

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