An Cailín Rua
As the dust settles on Budget 2019, the Government may feel it has retained the hearts and minds of the majority, but a quiet anger has settled over much of rural Ireland about the restoration of the 13.5 percent VAT rate for the tourism industry, which will be hiked from 9 percent in January.
This had been mooted for a while, and the 2011 decrease had always been designed as a temporary measure. The decrease then was progressive, designed to boost the tourism sector after its decimation in the economic crash. It provided a lifeline to many businesses, though many more did not make it. Over the past number of years the tourism sector has flourished, and the value placed on it as a driver of sustainable economic growth has grown.
But despite the PR about record-breaking numbers of overseas visitors, all is not rosy in the garden. There is still a serious regional imbalance, with Dublin the big winners as you would expect.
Above the invisible line that stretches from Galway to the capital, the heat map lacks red spots. Tourism Ireland does an excellent job of promoting the country abroad, using iconic and recognised imagery; but most overseas visitors want to hit hotspots like the Ring of Kerry and the Cliffs of Moher, and are less enthusiastic about going north along the west coast.
To be fair, Fáilte Ireland, responsible for developing domestic tourism, is aware of this imbalance and is actively addressing it, but these things take time. Here in Mayo, we rank seventh in the country for visitor numbers. Given the incredible landscape and product we have here as well as our biggest asset, our people, we should be doing better, but the numbers will only grow as product develops and the industry as a whole strengthens.
And that is the really infuriating thing about this measure.
The growth in the tourism industry did not happen by magic – it was the result of hard work by many, including poorly supported SMEs, in rural areas. These businesses put their shoulders to the wheel during tough times and delivered for the country, and it is grossly unfair that they must face this tax hike.
Though the work of Minister Ring’s department is very welcome indeed, business is still tough for many tourism operations in rural Ireland. Yet this blanket increase penalises them at the same rate as it does the flourishing areas that have, in some cases, been seduced by greed.
Despite offering better value for money in the west of Ireland, visitor perceptions of value will be negatively impacted at a national level, disproportionately affecting rural areas who struggle for volume. Even established tourist towns like Westport will suffer.
What’s also incredible is the apparent lack of Government understanding of the industry. Much tour-operator business is contracted a minimum of 18 months in advance; meaning that many businesses will have little option but to absorb the hike themselves in 2019.
At the risk of reverse snobbery, you’d be forgiven for expecting this level of wilful ignorance from South Dublin’s cosseted Shane Ross upon whose watch this happened, but it’s disappointing to see Kerry’s Brendan Griffin defending it, given his native county’s dependency on tourism. The Irish Tourism Industry Confederation has requested to defer the increase by a year. While still not ideal, such a deferment might allow businesses to adjust. Also, the fog surrounding Brexit might have cleared to reveal the new landscape.
It could be argued that full restoration at once, rather than a drip-feed of annual increases, was preferable – there’s nothing like ripping off the Band-Aid for a short, sharp shock – and that given the uncertain political climate, it is the prudent approach to take. Regardless of protest, it is unlikely the sector would have taken kindly to two half-increases in a row and the associated costs. And yes, the decreased rate was only ever designed as a temporary measure – but so was the USC.
The industry now needs to fight back. They may have lost this battle, but there are others to contest; the lack of investment in top-quality tourism attractions, the lack of funding for desperately needed tourism-development officers, and investment in chef training, for instance. If the industry picks its next fight correctly, it may well make gains in the war. It’s certainly owed some.
An Cailín Rua