'Cutting Vat in hospitality is vital for our tourism', says enterprise minister
Cutting the rate of Vat for Northern Ireland's hospitality industry is key to helping grow tourism here, Enterprise Minister Jonathan Bell has told a London summit.
Speaking at the British Hospitality Association (BHA) Summit he said Stormont would "continue to lobby the government on this issue and would welcome support from the wider industry and other UK administrations".
"A cut in the Vat rate for the accommodation and hospitality sectors would result in increased demand, which would in turn boost recruitment, investment and expansion right across the UK," he said.
Restaurant owner Bob McCoubrey - who runs three Mourne Seafood restaurants, including one in Dublin, and Home in Belfast - said a cut was "crucial" to help the industry survive.
Businesses here are competing with a low hospitality Vat rate of just 9% in the Republic, compared with 20% throughout the UK.
"It's crucial for over the next couple of years. At the minute, a sixth of everything in your till goes to the Vatman, regardless of whether you make a profit. It has cut our margins down," he said.
"We are in a region in the UK which has the lowest take home pay, so there is no scope for us.
"What we are seeing is our margins become slimmer and our costs going up. It's important for the future of tourism here - just as many restaurants are closing as opening.
"The figures don't add up at the moment."
And he said there is "no doubt" tourists and investors will opt to head to the Republic instead of Northern Ireland as a result of their lower rate.
"The point of lowering it is to bring in tourism, and you have to build up the infrastructure.
"We are also in Dublin, and while where we operate is not a paradise either - we pay higher wages, but lower Vat. But we'd rather do that than pass it over to the Vat man."
Eugene McKeever of family-run hotel firm McKeever Hotels, which has a hotel in Donegal as well as three in Northern Ireland, said the Republic's lower rate "is a big advantage and it would help big time to have that here".
Meanwhile, a drop in overnight trips from the Republic to Northern Ireland is a sign of the divergence in the competing markets, according to SDLP MP Margaret Ritchie.
"The difficulty of competing is even more apparent in Northern Ireland, as the tourism and hospitality sector in the Republic is subject to a Vat rate of only 9%. Evidence shows that reducing the rate of tourism Vat in the UK would lead to the industry expanding and stimulate jobs."
Rate of Vat faced by hospitality sector in NI, against 9% for firms in the Republic