Restaurateur calls for tax cut after Republic of I reland visitors' slump
Vat rate of 20% leaves 'very small margins' for tourist entrepreneurs
Published 24/07/2014 | 09:07
The owner of a restaurant chain is leading calls for a Vat cut for tourism after an alarming slump in visitors from the South.
After only months of running a new restaurant in Dublin, Bob McCoubrey said the difference in his Vat return – based on the Republic's 9% rate for hospitality firms compared to the UK's 20% rate – was "amazing" compared to his established eateries in Belfast and Dundrum, Co Down.
His call was echoed by the Northern Ireland Hotel Federation which claims the UK Treasury would be £4bn better off by 2020 if tourism Vat was cut to 5%.
Last night Finance Minister Simon Hamilton told the Belfast Telegraph he supported a cut in the Vat rate.
But he added: "Unfortunately HM Treasury has already indicated that any reduction in Vat would need to apply across the UK as a whole and they have indicated that, in their view, the cost of lowering the rate of Vat for the hospitality sector would be too high."
Alarming figures from the Northern Ireland Statistics and Research Agency showed 79,000 fewer overnight stays in Northern Ireland by residents from the Republic between April 2013 and March this year – with a £7m fall in the spend of southern visitors. Northern Ireland Tourist Board chief Howard Hastings said Northern Ireland enjoyed the most halcyon of days when Vat was 15%, five years ago.
He said independent research for the British Hospitality Association found that 80,000 jobs could be created UK-wide if it were slashed to compare more favourably with Europe.
"The Treasury would be hit by a £1bn loss in the first year but after 10 years it would gain £3bn and would result in 80,000 jobs across the UK," he said.
He said that of the UK regions, Northern Ireland would "have more to gain proportionally" due to the ease of accessibility from visitors from the Republic, as the regions share a land border.
"The best period we ever had was five winters ago when the Vat rate in Northern Ireland was 15% and the equivalent rate in the south was 13%.
"It's a price sensitive market and people are aware of exchange rates. When you consider currency growth and the year-on-year appreciation of sterling against the euro then Northern Ireland got more expensive for visitors from the Republic," he said.
Janice Gault, chief executive of the Hotels Federation, said tourism Vat should be cut to 5%.
She said France created around 60,000 jobs since it reduced its rate of Vat a few years ago.
"A reduction in Vat in Northern Ireland would help make us more competitive along with a stronger events calendar to attract Southern guests," she says.
Mr McCoubrey said margins at his new Dublin restaurant on Charlotte Quay looked better than his firms in Northern Ireland.
He said: "We opened in April and our first Vat return was a very pleasant surprise. It's amazing the difference it makes."
He said that Vat, coupled with corporation tax – from which small firms in the Republic are exempt in their first three years – made for "very small margins" for entrepreneurs in North- ern Ireland.