The Midlands Branch of the Irish Hotels Federation (IHF ) gave a mixed welcome to the Minister for Finance’s Budget announcement. It welcomed the special allocation to be made for the national tourism Gathering initiative in 2013 and acknowledged the significant benefit the reduced VAT rate of 9 per cent has had for the hospitality sector; however, it criticised the guillotining of capital allowance schemes.
Tim Fenn, chief executive, IHF, said “Our members are fully behind The Gathering initiative and we look forward to working closely with Minister for Tourism Leo Varadkar and the tourism agencies to ensure it is a tremendous success. We appreciate Minister Noonan’s continued support of the tourism sector in relation to the jobs initiative and the valuable role that the reduced VAT rate has played in generating additional business for the hospitality industry.”
However, the IHF expresses major concern at the guillotining of accelerated capital allowance schemes which will not now extend beyond the tax life of each particular scheme or January 1, 2015, whichever is later. Mr Fenn stated that this will cause significant and lasting damage to an already distressed hotel sector. It will seriously erode the ability of hoteliers and their families to service existing borrowings in the situation where they do not have sufficient income to offset the allowances before the new deadlines. This change will exacerbate the problems of overhanging debt in the hotel sector.