Senator Sharon Keogan — Retention of 9% VAT rate for Hospitality
I begin with a phrase I do not find myself saying often. I would like to join the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, in calling for the extension of the 9% VAT for the hospitality sector. The hike back to the upper rate of 13.5% is set to take place at the end of the month. I, along with many others around the country, and I know many Members of this House and the Dáil, think that is going to be a mistake. The Minister for Finance, Deputy Michael McGrath, said this week that all measures due to end at the end of February are being looked at. I urge him and the officials in his Department to look very carefully at this measure which will affect hundreds of thousands of workers and businesses across the country.
The hospitality sector employs 240,000 people worth a combined €12.5 billion to the economy each year. A recent report commissioned by the Irish Tourism Industry Confederation showed that tens of thousands of jobs could be lost if the reduced 9% VAT rate is returned to 13.5% at the end of February as planned, due to the action undermining the competitiveness of the sector which is already struggling to cope with energy costs and labour shortages. Economist Jim Power, the author of this report, states that the risk of a downturn in international travel caused by the marked deterioration in the global economy is very real and could have serious implications for Ireland's tourism industry. Mr. Paul Doran, owner of the Barn in Glanmire, Cork, said that the Government's proposal to restore the 13.5% VAT rate to the industry is the biggest threat facing the hospitality sector, which will lead to unavoidable price increases. I am sure the public are not fed up with those yet.
I urge the Minister, Deputy Michael McGrath, to examine ways to keep the cost to business down. I know the Exchequer needs funds but putting people out of business is no business at all for the Government to be in and that is what will happen as a result of this tax hike. If the Department is to get really serious about being good for business, the philosophy behind the temporary reduction in the first place, maybe should be raised back up.
Speaking of temporary, the USC should be abolished. More money in people's pockets, more spending and more economic growth, is that not the tune? The Department of Finance would tell us that abolishing the USC is impossible and that it would have to find the money from somewhere else. My advice to the Executive would be the same as it was giving to people all over the country, that is, spend less, spend smarter. There was a time before the USC, and its absence did not lead to planes falling out of the sky. I know the importance of business in this country, as do many in these Houses, and we are very concerned about what 1 May will hold for businesses.