Chancellor Rishi Sunak’s decision to cut VAT rates on hospitality from 20 per cent to 5 per cent will damage tourism in Donegal, a leading hotelier in the county has warned.
The chancellor cut Value Added Tax on food and non-alcoholic drink, accommodation and admission to tourism attractions across Britain and Northern Ireland in an attempt to protect jobs by boosting the tourism sector.
However, tourism chiefs in the county said Donegal was in a unique position because it depended on Northern Ireland visitors more than any other tourism area.
Chairman of the Irish Hotel Federation (IHF) in County Donegal, Paul Diver said the Irish government must act immediately if this year’s tourism season is to be saved. He called on Taoiseach Micheál Martin to immediately reduce the Irish VAT rate from 13.5 per cent to match the UK's five per cent rate.
Tourism leaders have revealed occupancy rates for this month and last month in County Donegal were already substantially down at around 25 per cent in comparison to 90 per cent for the same period last year.
Mr Diver said: “A lot of hotels are just grateful to be open and re-employing staff but, to be honest, we’re very concerned with the move that the UK government has made by reducing the VAT rate from 20 percent to 5 per cent. That’s an absolutely massive move; that leaves us (in County Donegal) at an unfair competitive disadvantage now.
“Northern Ireland has a competitive advantage over us.”
The Donegal businessman, owner of the Sandhouse Hotel in Rossnowlagh, said the chancellor’s move made Northern Ireland much more attractive for visitors.
“There’s no other county in Ireland that would be affected as much as Donegal,” he said.
Mr Diver said IHF members were hopeful that the Irish government would match the UK VAT rate for tourism. However, he said immediate action was needed as tourism operators were running out of time.
