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Jun 15, 2012   //   by Helen   //   Blog  //  No Comments

What does the Jobs Initiative mean for Irish consumers?

Yesterday the Irish government announced their jobs initiative to stimulate employment and improve Ireland’s competitiveness.

As the tourism industry has suffered an approximate loss of earnings of 30% over the years 2007 -2010, many of the measures are designed to stimulate this sector. The reduction in VAT on tourism related services from 13.5% to 9% is very welcome. What does this mean for the consumer?

The Minister stressed that the VAT reduction must be passed onto the consumer, and that the government will be monitoring these prices. Here are some examples of pricing reductions that we should see with effect from July 1, 2011:

EFFECT OF VAT REDUCTION 

Desert

Lunch

Dinner

Hotel Room 

Price before – 13.5% VAT

5.00

10.00

25.00

80.00

Price after– 9% VAT

4.80

9.60

24.01

76.83

These reductions are significant, especially when accumulated over the course of a week long holiday. So, your Irish holiday should be even better value this year! These reductions, together with the abolition of the travel tax, are very welcome news for us all.

It should be noted that not all small tourism businesses are VAT registered. Some self catering operators may have legitimately opted not to register for VAT, under the rules that govern short term lettings. This means that they do not charge VAT on their holiday lettings and that they cannot reclaim VAT on their inputs; such as laundry, repairs and refurbishment. It also means that their prices will not be affected by the VAT reduction.

You can read the full text of the Minister’s speech here.

What do you think of the jobs initiative? Please let us know in the comments below!

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