Minister for Finance Paschal Donohoe has said he will not change the VAT rate of 9% on the tourism and services sector.

Mr Donohoe said that while there is still a great deal of uncertainty about the outcome of the Brexit process, tourism continues to be a" national success story".

But he added that the one clear impact of the Brexit vote in the UK has been a continuing weakness in the value of sterling.

"While I note that prices in Dublin continue to rise, I have said before that VAT policy cannot be decided on the basis of one location only but in the context of the national interest," Mr Donohoe stated.

He also said he was allocating a total of over €2 billion in total funding for the Department of Transport, Tourism and Sport for next year.

This includes €112m for funding to enhance further the country's tourism offering and market the country abroad.

Meanwhile, Ireland will open new resident diplomatic missions in Chile, Colombia, Jordan, Vancouver and Mumbai as part of the Government’s overall Budget 2018 package.

Additional funding will be directed towards augmenting Brexit resources, following recent steps to increase staff numbers working on Brexit in Dublin and in major European capitals like Brussels, Berlin, Paris and London.

Budget 2018 Reaction

The Irish Tourism Industry Confederation has welcomed the retention of the tourism VAT rate of 9% in Budget 2018, adding that it was a "vital measure for the sector". 

"Tourism is at a key juncture with our biggest source market, that of Britain, in sharp decline as a result of Brexit," commented the confederation's CEO Eoghan O'Mara Walsh.

"In this context it was essential that the tourism VAT rate was maintained in order to help the sector retain competitiveness and support jobs, and regional growth," he added.

Adrian Cummins, CEO of the Restaurants Association of Ireland, said the retention of the 9% VAT rate was "crucial" for the industry.

Mr Cummins said it is not only essential to the sustainability of restaurants and businesses in the tourism sector but also to job creation and the continued growth of the economy.

He said that Ireland is still operating in a three-tier economy - Dublin is galloping ahead and tourism hotspots have reported a good year, there is still however many parts of Ireland, including rural and boarder counties where business is deeply challenging. 

"The VAT remaining at 9% was crucial to theses parts of Ireland," he stated.

And Joe Dolan, President of the Irish Hotels Federation said the 9% rate has been instrumental in the recovery of the tourism industry, which has created approximately 60,000 new jobs since the measure was introduced in 2011.  

"Tourism is an indigenous export industry which not only supports approximately 230,000 jobs - equivalent to 11% of total employment in Ireland it also plays a vital role in addressing the regional imbalance in our economy," Mr Dolan said.

"The 9% VAT rate has been the single most important fiscal initiative for Irish tourism in the last decade and we are pleased the Government has retained the measure," he added.