An Oireachtas committee has called on the Government to extend the reduced 9 per cent rate of VAT out to 2025 to help hospitality and entertainment businesses recover from
the “devastating” effects of the pandemic.
In a report on the two sectors, the committee on tourism, culture, arts, sport and media has made 27 recommendations stretching from financial supports and consumer spending initiatives to reform of legislation and guidelines.
Fianna Fáil TD Niamh Smyth, who chairs the committee, said the sectors had “suffered immense adversity” as a result of the pandemic.
The Irish Hotels Federation has welcomed the report , in particular its recommendations in relation to the extension of the tourism VAT rate of 9% to 2025, as well as an extension to the Local Authority waiver and the doubling of the COVID Restrictions Support Scheme (CRSS). Tim Fenn, Chief Executive stated: “The certainty over the 9% VAT rate is vitally important. Many hotels are already contracting for international business up to two years out. Our current 9% VAT rate has only been committed to until September 2022. This is causing confusion in our highly competitive international marketplace and particularly as we seek to restore international connectivity to our island nation and rebuild international tourism against the backdrop of this pandemic. The 9% VAT rate is proven to be the right rate of VAT vis a vis our European competitors.”
Mr Fenn said that the Committee’s recommendation to extend the Local Authority Rates Waiver for a full year for tourism and hospitality businesses, along with a doubling of the CRSS would help tourism and hospitality businesses to plan for the longer term. “The tourism and hospitality industry has been disproportionately impacted by government restrictions around this pandemic. Government supports to date have been very welcome and have been a lifeline to many businesses. Tourism will recover, but it will take time, and businesses need greater certainty over costs to ensure competitiveness and to allow them to plan for the years ahead,” said Mr Fenn.
Pre-Covid, tourism supported over 270,000 livelihoods, one in 10 of all Irish jobs, with 70% of these jobs located outside of Dublin. “Hotels and guesthouses, which are an integral part of its infrastructure, are committed to restoring livelihoods as quickly as possible. That requires continued government supports to enable them to recover when there is a meaningful increase in international visitor numbers,” he added.
The IHF has also welcome the signing of legislation into law earlier today that will facilitate the resumption of indoor hospitality.
“We heard evidence that hospitality businesses are on the brink of collapse, with some 50 per cent of restaurants facing permanent closure – while revenue across the hotel sector fell by more than €2.5 billion in 2020, marking an unprecedented drop of 60 per cent,” said Ms Smyth.“The challenges facing the entertainment sector are no less severe. Evidence presented to the committee notes that, of 55,000 workers in the arts, 58 per cent have been wholly reliant on the Pandemic Unemployment Payment (PUP) or Employment Wage Subsidy Scheme.”
The economic and social consequences of coronavirus will continue to present “significant difficulties” for workers and businesses over the months and years to come, she added.
It has also recommended that the rates paid under the Covid Restrictions Support Scheme be doubled for tourism and hospitality businesses, that the waiving of local authority rates be extended for these businesses for a full year and that the Government establish a voucher scheme and introduce a new public holiday to stimulate domestic spending.
The Government should modernise licensing laws and application processes to reduce bureaucracy and stimulate the night-time economy, said the committee. It also said extended trading hours should be brought in line with other European countries.
All additional licensing requirements, such as outdoor seating permits, should be simplified and moved online, while insurance reform should also be tackled urgently, the committee said, while the full rate of PUP should be maintained for workers in the entertainment sector until their industry is fully reopened.