Raised VAT rates in hotel sector to cost rural jobs

Any attempts by the government to raise the VAT rate on the hotel sector will cost numerous jobs in rural Ireland warns Fianna Fáil TD for Roscommon/Galway Eugene Murphy.

Deputy Murphy confirmed that any moves by the government to apply an increase in the special lower VAT rates for hotels would be a detrimental move for the industry.

“Hotels currently enjoy a special lower nine percent VAT rate however I would be fearful that the government may move to increase this to the full 13.5 percent VAT rate to hotels, guest houses and bed and breakfasts.

Many rural hotels which are without doubt doing better now because of the improving economy do not have the same footfall as major hotels in urban areas and these rural hotels and the industry in general will face tighter margins if the government change the goalposts.

It’s also important to point out that in many rural areas hotels and guest houses are very reliant on seasonal business. It also worth noting that many hotels are facing extra service charges.

Rates paid on hotels etc have in many cases increased significantly under this Government and indeed the last FG/Labour Government. Insurance costs have sky rocketed with many hotels having to pay insurance costs on monthly Direct Debits in order to manage payment of their bills,” said Deputy Murphy.

The Fianna Fáil TD has called on Minister Pascal Donohue not to increase the VAT rate to 13.5 percent as it would be most unfair to some hotels.

“If there is a justification to claw extra tax back from some of the bigger hotels in the main urban areas I have no doubt the Minister and officials can easily come up with a scheme.

“I would urge the Minister to consider the negative impact which a rise in VAT rates would have for the hotel industry particularly in rural Ireland where many small to medium businesses are already struggling for survival,” concluded Deputy Murphy.

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