VAT rate hike could cause hundreds of lay-offs in Galway
The Minister for Finance has been warned that hundreds of jobs in Galway’s hospitality and tourism sectors are under threat if the special 9% VAT rate is increased in this month’s Budget.
Galway West Labour TD, Derek Nolan told Michael Noonan in the Dáil that the city and county are heavily dependent on tourism, and the sector is still in a very fragile state.
He warned that if the 9% rate expires, a “much-needed lifeline” will be taken from businesses.
The special rate was introduced in July 2011 and is due to expire on December 31, when it will revert to 13.5%. The reduction was brought in to aid tourism-related activities including restaurants, hotels, as well as the likes of cinemas, hairdressers and newspapers.
Deputy Nolan told the Connacht Tribune: “The decision to reduce the VAT rate is one of the government’s early successes and it has given a much-needed lifeline to many businesses in Galway that were struggling to keep afloat.
“As a Galway Deputy, I am aware that the city and county I represent are extremely tourism-dependent. In this context, numbers have increased both this year and last and I believe this job stimulus and the VAT rate have contributed towards that.
“There have also been positive signs with regard to employment figures in the past year and there has been job creation which, after years of job losses, is to be welcomed.
“However, we still are at a very fragile state and the jobs in the tourism and hospitality sectors in Galway and nationwide must be protected.
“Having spoken to many hoteliers and restaurateurs across the Galway West constituency, I know the lower VAT rate has played a central role in maintaining and creating jobs and giving businesses a renewed sense of confidence.
“I was heartened by the Minister’s comments that the 9% VAT rate has indeed boosted tourism, created additional jobs and has had a positive impact on the number of trips to Ireland from overseas.
“During the debate, Minister Noonan assured me that he will consider the VAT rate reduction in the context of the upcoming Budget,” said Deputy Nolan.
Meanwhile, owners of local newspapers have also lobbied the Minister to extend the 9% rate on their publications, pointing out most are suffering from declining sales and drops in advertising revenues.
The details of Budget 2014 will be unveiled on Tuesday, October 15.