THE abolition of the special 9 per cent VAT rate for the hospitality industry could be put on hold by the Minister for Finance amid fears over the full impact Brexit could have on the economy.
Prior to his retirement from the Finance portfolio, Michael Noonan said that he hoped the lower rate of VAT he introduced in 2011, would remain in place after next October’s budget.
At an Oireachtas Budgetary Committee meeting, the new Finance Minister said €600 million would be generated if the rate was returned to 13.5 per cent but he added that other economic effects could occur as a result.
“One of the issues I have to consider is the number employed by the tourism industry and in the service sector. For example, the impact on sterling of Brexit and, therefore, the number of British visitors coming to Ireland has to feed into the decision.
Last week, figures from the Irish Hotel Federation (IHF) showed that while the tourism sector was returning favourable figures and having a positive outlook for the remainder of the year, the number of UK visitors had significantly dropped.
“The read-out from our airports regarding the number of British visitors also has to feed into my decision. However, all the decisions will be taken together later in the year.”
Minister Donohue was told that Brexit fears led to the retention of the lower rate at last year’s budget but effectively, it had its job done.
However Minister Donohue said that no final decision had been made ahead of his first budget scheduled for October 10 next.
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