Belfast Telegraph

Northern Ireland's 20% VAT suffocating tourism growth, says Hospitality Ulster chief


Colin Neill
Colin Neill

By Colin Neill

Yesterday the Irish Minister for Finance Paschal Donohoe announced what is likely to be the final budget under the confidence-and-supply agreement.

Dominated by health and housing, the minister is confident that gross domestic product will grow in the next period against this budget.

Most notable to us at Hospitality Ulster and the media across the island over the past week was the confirmation by Mr Donohoe to raise VAT on hospitality services in the Republic from a previous special rate of 9% to a new rate of 13.5%.

This uplift has been rejected by the main lobby groups in the south, claiming that this budget is one that the tourism sector has paid for.

We know how hard they have been fighting.

Specifically, this has pulled into sharp focus the need for Northern Ireland to address the very high rate of VAT at 20%.

Even at 13.5% in the Republic, the gap of 6.5% places us at a serious competitive disadvantage.

The UK's 20% tourism VAT rate is one of the highest in Europe, and our hospitality and tourism businesses are particularly vulnerable as the Republic is its second largest market and nearest competitor.

The disadvantage of the new 6.5% gap will continue to be acutely felt right across Northern Ireland with our VAT rate acting as a brake on the growth of the hospitality and tourism sector.

The latest independent research shows that more than 12,000 jobs would be created across accommodation, visitor attractions and food if the VAT rate were cut to 5%.

This would create a sustained positive impression on the economy.

It is imperative that the rate is cut so we can continue to grow a vital part of the regional economy.

The hospitality sector is an engine for growth and we can no longer suffocate it.

This is a live and real problem which is hitting trade.

We now look ahead to the end of October and the UK Autumn Statement, to put pressure on the Chancellor Philip Hammond to create a more competitive environment by reducing the VAT rate in Northern Ireland.

Last year we welcomed his commitment to look into the issue, but now the answer is staring the Treasury in the face.

The Chancellor must now take the important decision to support the hospitality sector in an area of the UK that he is responsible for.

Colin Neill is chief executive of Hospitality Ulster

Belfast Telegraph