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Trade welcomes launch of tourism VAT probe

April 4th, 2018 | by LCN Editor
Trade welcomes launch of tourism VAT probe
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It appears that the NI hospitality trade might finally have begun to inch towards resolution in its long-standing and bitter dispute with government over the rates of tourism VAT here.

The industry welcomed an announcement in March by the Treasury, which will now hear evidence on the likely impact of cuts in both tourism VAT and the equally contentious Air Passenger Duty (APD) in Northern Ireland.

The inquiry comes on the back of a commitment by the Chancellor in his autumn budget last year.

Northern Ireland and the UK are one of the very few regions left in the EU where hospitality and tourist businesses don’t enjoy a reduced rate. The current 20 per cent rate is more than three times the amount their counterparts in France and Germany will pay and twice as much as comparable businesses in Italy and Spain.

In the Republic, tourism VAT is pegged at just nine per cent and that lack of parity has long proved a contentious issue between the two jurisdictions.

APD, which adds an additional cost to the price of booking short-haul flights to Northern Ireland, is also to be investigated. The Republic of Ireland abolished APD at its airports in 2014 and has since reaped the benefits in increasing visitor numbers in the years since.

Ciaran O’Neill, the immediate past-president of the NI Hotels Federation, is a long-time advocate of reduced VAT rates for hospitality. Speaking to LCN this month, he said:

“The Hotels Federation together with Hospitality Ulster and the British Hospitality Association has been campaigning to see change here for the last 10 years. When the DUP got their deal with the Conservatives, it was agreed that this would be looked at again and we believe that one of the plus sides of Brexit – if there is such a thing – could be a review of tourism VAT and APD in Northern Ireland.”

The Federation’s chief executive, Janice Gault, said that the organisation was “delighted” with news of the consultation launch:

“For hotels, VAT is a critical issue and we have been highlighting this since 2004,” she added. “After over a decade of arguing and explaining the hotel position, we hope that the consultation will finally bring change and clarity to the situation in Northern Ireland.

“Many people don’t realise that accommodation in the RoI has operated on a reduced VAT rate since 1986. This has allowed hotels to operate with a distinct competitive advantage over hotels in Northern Ireland,” continued Janice.

Calling for VAT to be reduced on hotel accommodation in the first instance, Janice said that such a move would likely be VAT-neutral within three to five years.

“As more rooms were sold, revenue to the treasury would rise, jobs would increase and the economy would grow. We believe this would be a real winner, she added. “The UK now has one of the highest rates in Europe and we would hope that government will take on board the findings [of the consultation] and act in the interests of tourism.”

 

 

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