Jonathan Bell meets Tory counterpart about cutting VAT rate for tourist spots, bars and hotels
Industry ‘at disadvantage with duty more than double that of Republic’
A Government minister responsible for tourism across the UK will examine how lowering the rate of Vat for the hospitality and tourism sectors - in line with the Republic - could help the industry here.
Enterprise Minister Jonathan Bell has said he met MP David Evennett earlier this month, who is now examining the impact of bringing in a low rate for bars, hotels and restaurants "based on the Republic of Ireland's experience".
Mr Evennett is currently the acting Sports, Tourism and Heritage Minister.
There have been continued calls from the tourism and hospitality sectors in Northern Ireland to lower the tax rate in line with the Republic.
Businesses here are competing with a low hospitality Vat rate of just 9% in the Republic, compared with 20% throughout the UK.
Responding to an Assembly question on the issue, Mr Bell said: "My department worked with the Department of Finance and Personnel, in providing evidence, both written and oral, for the Finance Minister to submit to the Northern Ireland Affairs Committee as part of its inquiry into promoting the tourism industry in Northern Ireland through the tax system.
"The case was made that a reduction in tourism Vat had the potential to help support and grow our tourism economy further and improve the competitiveness of the industry as a whole."
Colin Neill, chief executive of Hospitality Ulster, said: "The rate of Vat is critical, particularly in the Northern Ireland context. We are the only part of the UK that has to compete with somewhere with a land border with a lower rate. It's a price sensitive industry. We are trying to compete directly (with the Republic) and especially closer to the border.
"Our main markets are domestic, England and the Republic. (People will say) why spend more money in Northern Ireland?
"We have been pushing. We have asked for 5% on accommodation, food and visitor attractions. Even if we got 9%, it would be a level playing field and would make an incredible difference."
But Mr Bell reiterated concerns that a cut in the rate could not be applied just to Northern Ireland, and would have to be introduced right across the UK.
"Unfortunately Her Majesty's Government has held a consistent line that such a change could not be applied exclusively to Northern Ireland, and that the Government had no plans to introduce a reduced rate of Vat for tourism across the UK as a whole."
Janice Gault, chief executive of the Northern Ireland Hotels Federation, said the disparity between the tax rates is the biggest problem the industry faces here.
"We believe we have put forward a good argument," Ms Gault said.
"We would be happy for (a tax drop) for hotel bedrooms in the first instance, then moving on to food and drink."
According to a study by Hospitality Ulster, after the introduction of the 9% tourism Vat rate in the Republic, visitor numbers have increased by one million.