The Irish Tourism Industry Confederation says that the Government can affect many of the domestic cost increases which damage the competitiveness of internationally traded services such as tourism.
In its pre-Budget submission, the ITIC calls for a reduction in VAT from 13.5% to 12.5% as a first step towards an eventual level of 10%. It also wants Local Authority charge increases limited to 2% while the real spend on tourism marketing and training should be increased by 5%.
The confederation asks the Government to avoid any new fiscal or regulatory measures which adversely affect tourism and also calls for an increase in the VAT exemption limit to €50,000 for the smaller accommodation facilities.
It says its proposals are consistent with the recommendations of the Tourism Policy Review Group and are achievable given the projected strong state of public finances in 2006.
The ITIC says that high domestic costs are increasingly wiping out the benefits of the low direct taxes. It says that while the overall inflation rate has been brought under control, some public sector increases 'are completely out of control'. It points out that the consumer price index between August 2004 and 2005 rose by 2.3%, while costs for water supply, refuse and other local authority services rose by over 21% and energy costs jumped by 15.7%.
Eamonn McKeon, CEO of ITIC, says there are challenging issues to be faced by the tourism industry itself, and it is responding accordingly. 'But it can only be successful with the strong support of Government on those issues which lie outside the industry's own control,' he says.
He says the targets set by the Tourism Policy Review Group, which envisaged 10 million visitors by 2012 and a doubling of revenue, can only be met if there are substantial improvements in the competitiveness of tours, and if the business and policy support environments are improved. 'Budget 2006 can begin that process,' he concludes.
