Finance Minister Michael Noonan has told the Dáil that he is retaining the 9% VAT rate for tourism related activities, describing it as a great success since it was introduced.

But he said it was incumbent on the industry to ensure that this relief continues to be passed through fully to the consumer and he said that if prices begin to rise, the case for retaining the measure diminishes.

The decision to retain the rate was welcomed by representatives of the retail and hotel industry.

The cut in the VAT rate for tourism services was funded by the 0.6% Pension Levy, which was introduced in 2011 and continued in the Budget last year.

"Without the Pension Levy, there would have been no VAT reduction," the Minister stated.

He said that as result of the overall improvement in the country's finances, he was in a position to continue the VAT reduction but was also ending the 0.6% Pension Levy at the end of 2014, as he had previously indicated.

The additional 0.15% Pension Levy introduced for 2014 and 2015 will expire at the end of 2015, the Minister added.

Mr Noonan also said that the new Irish film tax credit scheme is due to start next year. He said that as the new scheme beds down, he will monitor how it works and how it can be improved. 

No tax hikes on drink, petrol, diesel but cigarettes up 40 cent

Finance Minister Michael Noonan has told the Dáil that the measures included in Budget 2015 will cost about €585m next year.

In order to pay for this, Mr Noonan said that the price of 20 cigarettes will increase by 40 cents from midnight, with a pro-rata increase on other tobacco products.

A 25g pouch of roll-your own tobacco will increase by a further 20 cents per 25g pack.

Mr Noonan said he was not raising taxes on alcohol, petrol or diesel. There will be no increases on motor tax or vehicle registration tax, he added.