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ITIC: Retention of 9% VAT Rate and Investment Vital in Budget 2019

ITIC: Retention of 9% VAT Rate and Investment Vital in Budget 2019

The Irish Tourism Industry Confederation (ITIC) has published a six-month progress update on its eight-year growth roadmap for the sector, Tourism: An Industry Strategy for Growth to 2025, which estimates that earnings from overseas tourism can increase by 65% to €8.1 billion annually by 2025 if the right policies and investment strategies are adopted and pursued. This would mean 80,000 more jobs nationwide and an increase to the exchequer in direct tourism-related taxes of just under €2 billion annually from overseas tourism.

The first six-month progress update shows that growth continues at +8% year-to-date in 2018 and the tourism industry is adding significant capacity increases in hotel developments and in air and sea access in the coming years. Despite tourism’s current success, however, there are significant challenges, with Brexit a major concern to the industry, which urges pro-tourism enabling policies from the Government.

Maurice Pratt, ITIC Chairman, said: “Irish tourism is Ireland’s largest indigenous industry, employing 254,000 people nationwide, and is at a key juncture. Correct actions need to be taken now to ensure that the sector’s significant potential is to be achieved. The Irish tourism industry is confident of future growth and it estimates that the inbound tourism business from overseas visitors to our shores can grow by 65%, to €8.1 billion, by 2025. This is significantly more than the national tourism policy target, which is €5 billion for the same period. The Government must match the industry’s ambitions and commit appropriate funds to overseas marketing and new product development so that tourism can realise its potential for the country.”

Of the 51 policy recommendations outlined within the ITIC 2025 Strategy, six have already been achieved with another 32 in progress. The policy recommendations that have already been achieved include the development of a brand for Ireland’s Midlands and Shannon corridor, Ireland’s Hidden Heartlands; the launch of a national Greenways strategy to include at least one coast-to-coast Greenway; and a root and branch review of the British market.

However, Eoghan O’Mara Walsh, ITIC Chief Executive, says that the retention of competitiveness remains vital if Irish tourism is to continue to grow: “Irish tourism must retain its competitiveness and ensure that we continue to offer tourists good value for money. There is an onus on both the industry and the Government to manage costs accordingly. In this regard maintaining the 9% tourism VAT rate is critical – with Brexit looming the last thing the sector needs is an increased VAT rate that would depress demand, damage the sector, and hit regional Ireland particularly hard.”

ITIC’s six-month progress update monitors and reviews the progress of 10 themes in the 2025 Strategy. Brexit is a major issue for Irish tourism, with 39% of all international visitors coming from Britain. ITIC has quantified that a hard Brexit will cost Irish tourism at least €260 million in its immediate aftermath and criticises the Government for not funding a tourism Brexit-mitigation plan.

Ruth Andrews, Deputy Chair, ITIC, said: “Tourism is the main regional employer throughout the country. It is too important a sector to take for granted. In that regard industry, State agencies and Government must work closely together to ensure pro-tourism policies are pursued.” She highlights that the tourism industry committed nearly €100 million in the last year in marketing Ireland overseas and will spend €2.5 billion in new capital developments over the coming three years: “The Government too must play its part and restore tourism budgets so that the sector can withstand the upcoming Brexit shock and continue to provide regional balance and growth. There is a 34:1 return on Government investment in tourism – it should be clear that the economic argument for supporting Ireland’s largest indigenous industry is compelling.”

ITIC’s 2025 strategy is the result of extensive consultation and research with Ireland’s tourism industry throughout the country and the policy recommendations within it are the considered views of the Irish tourism sector.

In terms of Budget 2019, the ITIC strategy highlights the importance of retaining the 9% VAT rate and advocates that €50 million more per annum should be committed to tourism State agencies to increase overseas marketing and industry supports.

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Michael Flood is the Editor of Ireland's leading travel industry publication, Irish Travel Trade News. With more than 35 years experience, he has accumulated an in-depth knowledge of the airline industry and the travel and tourism world.

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