Belfast Telegraph

Friday 19 September 2014

VAT's not how to show hospitality to tourism

David Elliott, Business Editor
David Elliott, Business Editor

While the debate surrounding the devolution of corporation tax-setting powers to Northern Ireland sits on ice, the hospitality and tourism sectors are fighting a tax battle of their own.

Not corporation tax, something which isn't much of an issue for the bulk of operators across the industries which tend to be relatively small in size.

Instead they're focusing their battling powers on value added tax (VAT), that not-so-stealth tax which is charged to customers and makes life difficult when competing for business on a not-so-level playing field.

The undulation of the pitch comes from the fact we share a land border with our biggest competitor. If that weren't enough, we also share a marketing campaign with our biggest competitor, making the disparity in VAT a little out of place.

In black and white terms, Northern Ireland's hotels, pubs, restaurant and the plethora of other companies which make up the hospitality and tourism industry here pay VAT at 20% while on t'other side of the border the same operators pay 9%.

That's a big differential and could be enough to dissuade a visitor from travelling here, staying the night here or spending time in our pubs and restaurants. The government in Dublin certainly knows how important the sector is and was so worried about it during the downturn that it cut the VAT rate for holidays from 13.5% in 2011. Here, operators in hospitality and tourism saw VAT bills rise to 20% from 17.5%. You can see why they're a bit miffed.

And when it comes to hotels, the campaign doesn't just call for special dispensation for Northern Ireland, with the likes of the Northern Ireland Hotels Federation adamant they want a UK-wide cut for operators.

It said "a Northern Ireland alone stance would be difficult to execute due to EU directives and in the long run would not be as effective as a UK-wide reduction".

Still, VAT is a problem for operators, so with any luck Westminster will see that some clever tweaking of policy could level a playing field so uneven it seems we're running uphill. Now, more than ever, we need to make live a little easier for our hotels, pubs and restaurants.

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