A measure that was brought in temporarily, now seems set to stay. Minister for Transport, Leo Varadker, has annouced that the temporary 9% VAT rate will now be staying until the end of 2013.
The rate applies to a range of services in the tourism sector, including hotels, restaurants, leisure centres, and attractions.
Mr Varadkar stated that “Following recent discussions with the Minister for Finance, I have obtained an assurance that the lower rate of VAT will be maintained during 2013 so that businesses, tour operators and customers alike can plan for the 2013 season knowing that the 9% rate will apply. Initial indications suggest that the policy has worked well and there has been an increase in employment in the sector with prices charged to consumers falling as well.
“Early indications are that the policy is working. Employment among accommodation and food providers has increased by around 6,300 since July 1, last year. “
Ireland’s services sector grew at a slightly weaker pace in March but employment rose for the first time in 11 months and confidence hit a near two-year high, a survey showed today. The NCB Purchasing Managers’ Index (PMI), which measures activity in the services sector, fell to 52.1 from 53.3 in February, staying above the 50 mark that signals growth for the second month in a row.
Ireland returned to recession in the final three months of 2011. The services sector slumped to a 12-month low in January but economic data since then has shown activity returning to levels seen early last year when the economy was expanding. Respondents linked the growth in output in March to higher levels of new business, with signs of an improvement in market conditions, according to Markit, which compiles the PMI data.
New export business at service providers grew for the eighth successive month and at the fastest pace since February last year, the survey showed. That is an encouraging sign. With domestic demand shrinking under the constraints of austerity imposed to meet deficit targets agreed under an EU/IMF bailout, Ireland is heavily dependent on its large export sector. Asian markets were reportedly the key sources of growth in new export orders in March, Markit said. ( C) Reuters