Dublin hotels too dear but Brexit means no room for VAT hike - Paschal Donohue

Dublin's hotels are too expensive - but they should not have to pay higher VAT, the finance minister has insisted.

Paschal Donohoe criticised the "unacceptable" prices being charged by the city's hotels, but defended his decision not to raise the 9% VAT rate for the hospitality and tourism industry in the Budget.

He said he was reluctant to raise the rate because of the impact Brexit was already having on visitor numbers to Ireland from the UK.

"It was a very fine judgment call I had to make. The prices are unacceptable. I don't think they are sustainable," he said.

"But my concern for this year, if I look at the impact sterling is having on British tourists coming to Ireland, I can already see the number of short-haul visits to Ireland beginning to decline.

"I would rather make a further decision in relation to (VAT) when I am clear of what is going to happen to the British tourism sector.

"British tourists are so important, particularly for shorter weekend visits," the minister told RTE 1's Today with Sean O'Rourke radio show.

The reduced VAT rate for the tourism and hospitality sector was first introduced by former finance minister Michael Noonan in the 2011 Budget on a temporary basis.

Reducing the rate from 13.5% to 9% was considered at that point to be a necessary support for the sector which was struggling during the economic crisis.

Paschal Donohoe

It is thought to have given it a much needed boost.

Mr Donohoe said that while Dublin hotel prices were "too high" he hoped that the planned building of additional hotel rooms would help "rebalance" pricing.

He also said that outside Dublin the tourism sector was not growing at the same pace as the city.

"We don't yet have a tourism sector in our country that is doing as well as I would want," he added.


KEYWORDS: Brexit, Budget 2018, VAT

 

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