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28 Sep 2017

Cutting Northern Ireland tourism rates would level playing field with Republic, says report

A proposed 15 per cent tax cut to tourism in Northern Ireland would make the country more competitive with the Republic of Ireland and create 2,000 jobs, according to a study.

The report, commissioned by Cut Tourism VAT – a campaign group representing the tourism and hospitality sector across the UK – found that average visitor spend in the Republic of Ireland is £350 but in Northern Ireland it is £186.

Northern Ireland pays a 20 per cent tourism tax rate while the Republic of Ireland pays just nine per cent. Closing that gap would help to level the playing field according to the report, conducted by economic research consultancy Nevin Associates – encouraging more people to visit Northern Ireland.

The research estimates that while the UK would initially take a £4.2m hit from the cut, it would generate an additional £32m over a five-year period, with that number increasing to £109m over the course of a decade.

“While existing research shows a cut in tourism VAT across accommodation, food and visitor attractions would create more than 200,000 jobs across the UK, this report is the first one that has looked in depth at the impact of a VAT cut on accommodation and visitor attractions in Northern Ireland,” said Colin Neil, chief executive of Hospitality Ulster – the national representative for the hospitality sector in the country.

“It demonstrates the significant benefits that come from a VAT cut and shows a very short period before the treasury benefits.”

At present, EU law prevents member states from setting VAT at different rates for different regions. With Britain’s planned exit from the EU, that power will be repatriated to the UK, with Northern Ireland’s Democratic Unionist Party (DUP) pushing for the cut following Brexit.

“A cut in VAT in the tourism sector would boost that sector enormously – it would attract more visitors, create more jobs and be a massive boost to the economy in the long run,” said Nigel Dodds, the DUP's senior MP at Westminster.

“This is a win-win – a win for the Treasury, a win for Northern Ireland and a win for people's employment prospects."