CUTTING VAT FROM 13.5% to 9% three years ago has resulted in the creation of 31,584 new jobs, according to a report this morning by the Restaurant Association of Ireland.

That includes an boost in direct employment in the food and accommodation sector of more than 20,000 jobs.

The report, entitled “9% VAT – Food, tourism and jobs: Rebuilding Ireland’s economy”, used Central Statistics Office (CSO) data, and concluded that the lowering of VAT in July 2011 was responsible for:

• 21,633 new jobs in the food and accommodation sector, between Q2 of 2011 and Q1 of 2014 (From 114,904 to 136,537)
• 9,951 additional jobs elsewhere in the economy, an indirect consequence of the VAT cut
• Savings for the Exchequer of €433 million in social welfare costs avoided
• Added Exchequer revenue, through payroll tax receipts
• €103 million in added revenue from employee taxes (USC and PRSI) and employer taxes (employers’ PRSI)
• A 17.8% increase in tourist visits to Ireland since July 2011
• An improvement in Ireland’s value-for-money (VFM) rating among tourists

Speaking in response to today’s report, RAI Chief Executive Adrian Cummins said:

As this report proves, in terms of creating new jobs in the food and accommodation sector, the introduction of the new VAT rate in July 2011 has been a major success.

In a foreword to the analysis, economist Jim Power acknowledged that cutting VAT was not the exclusive cause of new job creation.

Clearly, the lower VAT rate is not the only factor at play, but it has made a significant contribution…

The lower VAT rate is a good example of a government intervention that is working and that is making a significant contribution to employment all over the country and the public finances.

Scroll down to read the report in full.

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http://cdn.thejournal.ie/media/2014/08/pr86441_1_final-rai-national-economic-report.pdf