Minister considering raising VAT rate for large hotels which may be 'milking the system'

Increased taxes for the tourism sector may only apply to large hotels, according to Minister Shane Ross.

He says a multi-tiered VAT system is being considered for the hospitality sector in the upcoming budget.

The special 9% VAT rate for the tourism sector was introduced by then Finance Minister Michael Noonan in 2011 to help the industry recover post-crash.

However, with the economy on the way back up there have been calls for it to be scrapped, particularly given the high price of hotel rooms in Dublin.

Prices are getting so high that Tourism Ireland CEO, Niall Gibbons, said it is starting to put tourists off coming here.

Mr Gibbons said: "The likes of Barcelona, Copenhagen and Amsterdam, where Dublin would be competing against, we are now starting to move into the more expensive zone, and that's a dangerous place to be."

Minister Shane Ross says some of them are milking the system.

He wants to look at how larger hotels could be charged more VAT than B&Bs or the rest of the tourism sector.

Mr Ross said: "It could be a several-tiered system, depending on how it works, but what I am suggesting is that those hotels that are milking the system should not necessarily be allowed a preferential VAT rate."

The Minister was asked how they would separate different types of hotels, who would move on to a higher rate, and how they would make sure the cost was not passed on to the consumer. However, he did not have answers.

"I've already said several times this is being examined. The detail will come out later on."

Shane Ross will have further discussions with the Department of Finance about the plan ahead of the budget

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