Tourism Tax is a Non Starter

13 August 2019

Tourism Tax is a Non Starter

Irish News Column, August

By Colin Neill, Chief Executive, Hospitality Ulster

‘Tourism Tax’ a non-starter warns Hospitality Ulster

With a ‘Tax’ on our fledgling Tourism offer now openly being proposed, I have to ask if those in power don’t actually realise how uncompetitive our tourism offer already is. In case they hadn’t noticed, we’ve the second highest Tourism VAT in Europe and the highest Air Passenger Duty (APD) in the world.
It would appear that all they see is an opportunity to cash in on what could be (if properly supported by government) the backbone of our economy before it even gets off the ground. Yes, tourism in Northern Ireland is on the up, but it’s still only 5.2% of our GDP, compared to the Republic of Ireland which is over 10% or Wales at 14%. It’s still limited to a small number of geographical locations and needs sustained investment, not increased taxation.
The justification for such a tax is, in reality, to offset the negative effects of tourism and potentially reduce tourist numbers. However, take a look out of the window, this isn’t Venice or New York. We’re a region of an island, off a larger island, that has to work extremely hard to get tourists here in the first place.
As the centre piece of the tourism offer, the hospitality industry can’t see the logic in such a policy and would be very concerned that the impact of any additional taxation would actually put tourists off coming here. We continue to struggle to compete with other parts of Europe as a destination.
We are very proud of our tourism offer in Northern Ireland. People travel here to enjoy our culture and our craic in our world class pubs and restaurants.
The hospitality industry is a major contributor to the economy to the tune of £1.2billion per year employing around 60,000 people, a tourism tax would simply add another unnecessary pressure which will eat into that positive contribution.
The latest tourism figures show that the potential for tourism in Northern Ireland is huge. But, to fulfil that potential, our industry needs support including common sense reform of our outdated licensing laws, reform of business rates, reduced hospitality VAT and abolition of APD.
In fact, it could have the unintended consequence of creating more day trippers as tourists base themselves in the Republic of Ireland and pop over the border to visit our attractions during the day. Retreating back across the border to spend the evening, and their money, in their pubs and restaurants, which already have a lower VAT rate than us.
Getting more tourists here, increasing their dwell time, getting them to spend more time in our pubs, restaurants, cafes and contributing to the night-time economy should be our collective focus. Revenues in hospitality and tourism have shown to far outweigh the financial benefit of a tax on tourists. We need to get away from the idea of taxing success.
The money that a family on holiday to Belfast would have to spend on the tourist tax is far better off in the till of a local restaurant, pub, shop or visitor attraction. So, let’s not cut off our nose to spite our face and stick the tourism tax idea in the bin and focus on Plan A - attracting tourists here in the first place.
Surely the people in power realise that increased tourism will result in increased tax take for our councils through paying more rates, plus increased employment for their constituents.
What’s next; a fun tax?