Ireland's tourism sector fears having to go it alone

Thu Oct 10, 2013 3:20am EDT
 
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By Padraic Halpin

DELGANY, Ireland (Reuters) - Reducing sales tax for Irish hotels, restaurants and other tourist businesses has paid dividends, a fact the country's finance minister was reminded of upon checking into his hotel room for a party conference last month.

The initiative created over 15,000 jobs in two years and helped visitors to Ireland rise by over six percent this year, the minister and other members of his Fine Gael party were told in carefully-placed pamphlets by the Irish Hoteliers Federation.

But with a seventh round of austerity in five years on the way in next week's budget, Michael Noonan is not sure he can find the cash for an extension.

In the popular tourist county of Wicklow, restaurateurs say he risks undermining one of the few economic bright spots.

"Things have definitely stabilized but food prices have gone up astronomically, our electricity and gas bills are higher and the price you can get per dish has come down so there's the math," said Emma Stone, owner of the Romany Stone restaurant in Delgany.

"You've already hit our customers in their pay, I've been hit as a director of the company and now you're going to hit the VAT rate? It's perception and people will just stop spending."

Though not as a big a contributor to the economy as it is in Spain or Greece, tourism is more employment-intensive than the robust export sector. Hotels and restaurants employ almost as many people as the nearly one in ten who work for foreign firms like Google, Apple and Pfizer.

It has also been given a kickstart by a year-long government campaign to lure visitors with Irish roots. 'The Gathering' has seen North American tourists rise by a massive 16.5 percent.   Continued...

 
People eat in a restaurant in Dublin as campaigners call for the retention of the 9% VAT rate for the hospitality sector ahead of Ireland's budget later this month, October 4, 2013. REUTERS/Cathal McNaughton