VAT Reduction Call

10 May 2011

The Republic of Ireland's finance minister, Michael Noonan, has announced that VAT on hotels, restaurants and other tourist establishments will be reduced to 9% from 1st July 2011 until December 2013.

This reduction, from the already low 13.5%, as well as the suspension of the air travel tax, will mean Northern Ireland's tourist industry will have to fight even harder for every pound.

For example, four friends from Amsterdam are deciding whether to take a weekend break in Belfast or Dublin. If they book two twin rooms at £80 per room per night, four flights at £60 each and spend £100 each on food and entertainment, the tax bill for Belfast will be £168.01 whereas in Dublin it will only be £59.51. That is a massive £108.50 difference.

Using the same example for visitors from New York would add another £192 in air passenger duty, a situation which is threatening Northern Ireland's only scheduled transatlantic flight.

The Federation has already called on the Government to abolish the air passenger duty for Northern Ireland due to our reliance on air travel for tourism. We will be stepping up that campaign as well as increasing our call that the Northern Ireland hotel industry cannot compete fairly with our nearest neighbour if we have a difference in VAT of 11% as well as the current differences in corporation tax.

Members are encouraged to contact their new MLAs and sitting MPs to further highlight this situation.

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