Siptu call for cut to 9% tourism Vat rate reckless, says IHF

“A new independent survey by accountancy firm Crowe Horwath indicates the average profit on each hotel room in Ireland grew from €7,347 in 2013 to €9,201 in 2014,” he said. “This massive upturn for the industry in recent years is also backed up by research published by Fáilte Ireland which confirms that visitor numbers continue to increase year on year.

Mr King said that despite what he said was overwhelming evidence of a significant upturn, employers in the sector represented by the IHF and the Restaurants Association of Ireland “are defying Government policy and refusing to engage in the Joint Labour Committee process which seeks to ensure workers receive a fair day’s pay for a fair day’s work”.

“The Government introduced a 9% Vat rate for this sector in 2011. This has enabled increased profits.

“However, when the Government has sought to ensure workers also benefit from this upturn, through the creation of a Joint Labour Committee for the hotel and restaurant sector, the employers’ groups have point blank refused to engage,” he said.

Mr King said the Government signed up to a International Labour Organisation convention which stated collectively that bargained sectoral wage setting mechanisms are essential.

He said that the refusal of employer groups in the hotel and restaurant sector to co-operate in creating a Joint Labour Committee is placing the State in breach of the convention.

“The Government must state clearly that if the IHF and the Restaurants Association of Ireland continues to subvert government policy in this area the preferential Vat rate for the hospitality sector will be ended in the October budget,” he said. This situation needs to be tackled now, otherwise the Government’s entire strategy on protecting low paid workers is in real danger of being undermined.”

The IHF said the position being adopted by Siptu was “irresponsible”. Its president Stephen McNally said that the measure had helped create more than 33,000 jobs since 2011.

He said by reducing the tax consumers pay on tourism services, the measure has brought Ireland more closely in line with tourism Vat rates in the rest of Europe, helping to level the playing field when competing with other international destinations.

“The resulting increase in visitor numbers is allowing hotels and guesthouses reinvest revenues into the sector through job creation, capital investment and refurbishment — all of which are vital for the economy. It’s time for SIPTU to act responsibly and stop jeopardising jobs.”Mr McNally said as wages account for 42% of turnover in hotels, the benefits of the tourism VAT rate have been felt directly by hotel employees in the sector. He said these employees were among best paid and most protected in Western Europe.

The IHF president said that the Joint Labour Committee system had lost all relevance since the introduction of the National Minimum Wage Act which he said had provided Ireland with one of the highest minimum wage rates in Europe.