Restaurant Association says 9% VAT rate created 2,349 new jobs in Donegal

A recent report published by the Restaurant Association of Ireland (RAI) has revealed that 2,349 new jobs in the accommodation and food services sector have been created in County Donegal since the introduction of the reduced VAT rate of 9% in July 2011.

This report identifies the direct and indirect employment associated with the introduction of the reduced VAT rate of 9%. Between Q2 2011 and Q1 2018, the number of people working in the accommodation & food services sector nationally increased by 54,400, taking total employment from 117,300 to 171,700 on a seasonally adjusted basis. 

The sector also accounted for 7.7% of total employment in the economy in the first quarter of 2018. At a national level, the increase in indirect employment as a result of the job creation in the accommodation & food services sector is estimated at 25,024. The increase in direct and indirect employment is estimated at 79,424.

The Restaurants Association of Ireland is urging Government to retain the 9% VAT rate for the tourism and hospitality industry as they believe it has improved the competitiveness of the sector, while ensuring the viability of many small businesses that have been going through challenging times. The RAI is asking Minister for Finance and Public Expenditure, Paschal Donohoe T.D, not to return the VAT rate to 13.5%.

Meanwhile Minister for Transport, Tourism and Sport, Shane Ross, who has hinted that the the 9 per cent VAT rate could be increased for large hotels and kept low for the rest of the industry, has stated that rural Ireland shouldn’t be hit by any changes to the VAT rate for the tourism sector.

The Minister had suggested a two-tier tax system for big hotels and the rest of the hospitality sector.