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The Budget 2022 package for tourism and hospitality has received a mixed reaction from different quarters of the industry.
The failure to extend beyond the end of next summer the special 9 per cent VAT rate for the sector was labelled a “disaster” by restaurants, while the wider tourism industry welcomed €89 million in business continuity supports and extra marketing funds, as well as €60 million to extend to the end of the year a waiver on commercial rates for hospitality tourism and arts.
The Restaurants Association of Ireland (RAI) said the budget was “disastrous, [with] no ambition to stimulate and revitalise the tourism industry”, which has been one of the worst hit by the pandemic.
Rate
The Government had already confirmed earlier this year the extension to the end of August 2022 of the special 9 per cent rate for the sector introduced in last year’s budget.
The industry lobbied hard for a further extension, but the RAI said the planned return to a 13.5 per cent rate on September 1st next year would contribute to “the death nail in the coffin” of many businesses.
Eoghan O’Mara Walsh, the chief executive of the sectoral umbrella group, the Irish Tourism Industry Confederation (Itic), said it was “very disappointing” that the rate had not been extended: “It damages our competitiveness when industry will be in fragile recovery phase. Ireland to have one of the highest tourism Vat rate across European Union. ”
He welcomed a further €50 million announced by Michael McGrath, the Minister for Public Expenditure, in business continuity grants that will be administered by Fáilte Ireland. Mr McGrath also announced €39 million in enhanced funding for tourism marketing.
Funding
Mr O’Mara Walsh said the split between extra marketing funding for domestic and international tourism would be “crucial”.
The industry also welcomed a €90 million package of spending measures for aviation, to help boost connectivity to the State. The restoration of key airline routes after the lifting of public health restrictions has been a key industry demand to help reboot the tourism and hospitality sector, which employed 265,000 before the pandemic.