Lower Hospitality VAT Rate Could Create Thousands of Jobs

Lower Hospitality VAT Rate Could Create Thousands of Jobs

10 September 2012

Pubs of Ulster has welcomed the move by Simon Hamilton MLA to encourage the Executive to call upon HM Treasury to reduce the rate of VAT for tourism services in Northern Ireland to be more in line with the Republic of Ireland.

A reduction in the VAT that restaurants and catering providers currently pay has the potential to create up to 3,300 job opportunities, increase revenues and enhance the tourism offer.


The hospitality industry generates one billion each year for the Northern Ireland economy and is vital to its sustainability – 8% of the workforce is employed in the sector.


Pubs of Ulster is eager to build on this and help the hospitality industry reach its full tourism potential by promoting the diverse food heritage to international visitors.


Reducing the VAT rate will help achieve this as lower prices will significantly increase demand from overseas and domestic tourists resulting in expanding employment opportunities.


Colin Neill, chief executive of Pubs of Ulster said:


“Pubs of Ulster has a wide membership base, consisting of bars, café bars, restaurants and hotels and we as their representative body are keen to support them in achieving greater prosperity.”


“We fully support Simon Hamilton’s motion calling for a reduction on the VAT that hospitality providers such as restaurants and catering services currently pay.  A reduction will not only benefit our members’ businesses but also the Northern Ireland economy as it will result in significant job creation in the sector and will support the achievement of ambitious tourism targets. Additional revenue will allow those in the sector to enhance their products.”


“Accredited research has revealed that the UK’s current high rate of VAT is restraining the development of the hospitality industry. A lower VAT rate would succeed in stimulating the creation of new businesses and additional jobs in the sector.  If Northern Ireland were to achieve a reduction similar to that in the Republic of Ireland, there could be approximately 3,300 jobs created in addition to the 35,000 individuals currently employed by the industry. It would also provide struggling businesses in the industry with the ability to retain their current workforce.”


“In 2010, 13 European countries reduced the rate of VAT for restaurants and catering services which has seen their hospitality industry yield positive results. The Republic of Ireland currently has a competitive advantage over Northern Ireland due to a reduced VAT rate of 9% cut from 13.5%. Their reduced rate has succeeded in attracting more foreign visitors and increasing domestic tourism as well as creating 6,300 additional jobs - putting the Republic of Ireland in a strong position to grow its tourism industry further.  A lower rate of VAT in Northern Ireland will allow our hospitality industry to claim a greater share of island wide tourism and benefit local customers in the province.”