"Increasing tourism VAT rate would be criminal" - Cllr Micheál Naughton

A Donegal hotelier and councillor has called on the government not to raise the VAT rate for the tourism industry.

The rate had been reduced from 13.5% to 9% to help counteract the devastating impact of Covid-19 on the hospitality trade. It is due to return to the higher rate from March 1.

Cllr Michael Naughton raised the matter at the December meeting of the Municipal District (MD) of Donegal.

He asked that a letter be sent to the relevant government departments outlining the need to retain the lower rate.

“Putting up the VAT rate would be criminal at this stage,” he said.

“There is an attitude that the hotels did themselves no favours. That may be true for the Dublins and Corks and Galways but it is certainly not true for Donegal. 

“To put up the VAT rate for businesses in this area would mean many places closing their doors. The minimum wage goes up in January. We will do that and we will support employees. But business owners need support too.”

Cllr Naughton, who manages the Clanree Hotel in Letterkenny said increased VAT would be a double whammy for businesses who had been warehousing PRSI during Covid-19. This will now have to be paid, putting even more pressure on businesses.

And with energy and other costs continuing to be unmanageable, the councillor said he feared the sector was facing a very bleak future.

He called on Donegal County Council's Economic Development section to seek an extension of the lower VAT rate.