Hoteliers and restauranteurs have welcomed the decision to retain the reduced 9pc VAT rate in Budget 2017.
But Michael Noonan appeared to fire another warning shot across the bow of the tourist industry in particular, noting that the economic case for the special rate has arguably diminished.
“The tourism and hospitality industry has recovered well,” he said. “It’s now performing strongly, due in no small part to the reduced VAT rate I introduced in our last term in office.”
Mr Noonan introduced the special rate in 2011.
“Though the economic rationale for maintaining this reduced rate may not be as strong today, I consider it would be prudent to retain the reduced rate in this year’s budget,” he added. “This will act as a buffer for the sector against the weakness in sterling, which increases the cost of holidaying in Ireland for British tourists.”
Joe Dolan, president of the Irish Hotels Federation, said the reduced VAT rate has been instrumental in the recovery of the tourism industry.
“This measure has been the single most important fiscal initiative for Irish tourism in the last decade and we are pleased the Government has retained the rate,” he said.
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