Although it was widely anticipated, tourism and hospitality sector bodies have reacted with fury to the Budget decision to restore VAT on tourism services to 13.5%.
The Restaurant Association of Ireland has called on Tourism Minister Shane Ross to resign, claiming that he has 'failed the industry'.
Announcing the tax increase, Minister for Finance Paschal Donohoe recognised that the industry supported almost 240,000 jobs, and said a new economic reality had taken hold which meant the reduction was no longer justified.
“Since the introduction of the new VAT rate in 2011, overseas visitors numbers have increased by over 3.4 million, and tourism employment has grown significantly,” he said.
The measure is expected to raise €466 million next year.
Commenting on the changes, John Stewart, Tax Director at accounting company Deloitte said the increase will have no impact on non VAT-registered businesses including many of those in the B&B sector.