Tourism bodies call on Irish Government to suspend plans to raise VAT on hotels by 50% on 1 january 2019

ETOA, the European Tourism Association and USTOA, the United States Tour Operators Association, who together represent the inbound European and American outbound tourism industries, have jointly written to Ireland’s Minister of Tourism and Sport calling for the Government to end plans to raise VAT levels on hotels by 50%.

Currently at 9%, the Irish Government made an announcement at the end of October that VAT on hotels will be raised to 13.5%, as of 1 January 2019.

The level of VAT was lowered because of the financial crisis in Ireland and as a result inbound tourism has boomed, but, argues the letter, the impact of the sudden tax rise cannot be passed on to consumers at this late stage and will have to be absorbed by the hoteliers, who have tight margins.

Tom Jenkins, CEO of ETOA said: “This is a savage penalty on companies that have invested in Ireland, and the consequences are likely to be catastrophic for the Irish tourism industry.”

Terry Dale, President of USTOA said: “Of international concern is the timing of this announcement from the Irish Government. A two and a half month notice period is inadequate for planning cycles that run 18 months in advance. Contracts for next year were signed in early 2018; prices for 2019 were published in August. Packages have already been sold.”