A FINE GAEL junior minister has claimed that there is a €350 million hole in Sinn Féin’s pre-Budget submission, because it has failed to account for how it would fund the retention of the 9 per cent VAT rate for the tourism and hospitality sector.
Minister of State Brian Hayes’ comments follow Sinn Féin’s pre-Budget submission which was launched yesterday and called for, among other things, the abolition of the property tax as well as a third rate of tax and new taxes on betting.
Sinn Féin has proposed a €2.45 billion adjustment with a mix of tax rises and spending cuts but says that the proposed retention of the 9 per cent rate is outside of this budget adjustment figure.
In a statement last night, Hayes said: “Everyone agrees that the 9 per cent VAT rate has been hugely successful since it was introduced by the Government in 2011.
“However, at €350 million, it is a significant cost to the Exchequer and its maintenance requires tax raising or expenditure savings elsewhere.“Sinn Fein has buried this line on page 28 of its submission and has failed to explain how exactly where the money will come to pay for this measure.”
Speaking on LMFM this morning, the Sinn Féin finance spokesperson Pearse Doherty accused Hayes of “political mischief” and said the retention of the 9 per cent rate is “additional” to the Budget adjustment which has been costed by the Department of Finance.
“It should be retained and it should be funded through the mechanism that it is funded through at the minute,” Doherty told the station.
The 9 per cent VAT rate was announced as part of a government strategy to boost the tourism and hospitality sector as well as create jobs in 2011 but is scheduled to expire and revert to the 13 per cent rate at the end of this year.
Finance Minister Michael Noonan has said that the government has not yet decided on whether to allow it to expire or maintain it. The government may also side to introduce a compromise rate of more than 9 per cent but less than 13 per cent.
The restaurant, tourism and hospitality has extensively lobbied the government to maintain the rate, claiming it has created thousands of jobs.
Hayes said this was not the first time Sinn Féin’s proposals have been “shaky”.
He added: “Last year, the party was exposed as having a €670 million hole in its figures by its failure to account for a proposed reversal of the 23 per cent VAT rate.”
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