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The VAT rate reduction in tourism and hospitality
services from 13.5 to 9% in 2011 resulted
in the creation of 37,600 new direct jobs in
accommodation and food services by Q4 2016.
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This is an increase of 34%, compared to an
increase of 12.5% in overall employment in the
country during this period. Taking the multiplier
effect into account another 18,800 jobs were
supported throughout the wider tourism industry,
resulting in a total increase of over 56,000 jobs.
It is estimated that the newdirect jobs contributed
to social welfare savings of around €620 million.
In addition, the payroll taxes accruing from the
additional employment contributed an additional
€147.6 million to the exchequer.
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Impact of job creation in the accommodation & food services Q2 2011-Q4 2016 in Ireland
Number of direct
jobs created
Number of
indirect jobs
created
Total increase
Social welfare
savings
from direct
employment
Payroll tax
receipts
from direct
employement
National
37.600
18.800
56.000
€620m*
€147,6 m*
Source: 9% VAT – Food, tourism & jobs, Restaurants Association of Ireland July 2016, * Based on Q2 2011 - Q1 2016
Other examples further support the argument of the positive effects of VAT reduction on employment. In
France
, in the 2 years following the VAT reduction on restaurant services in July 2009, the sector created 52.700
jobs, making the sector the number one in terms of job creation.
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In addition, VAT reduction allowed social
improvements and progress. A new and mandatory health insurance system was negotiated with unions by
the French hospitality associations. Furthermore, minimal wages were increased by +5.5%, a bonus of 500 € as
well as 2 additional days off were granted to restaurant employees.
Also in
Belgium
, following the VAT reduction for restaurant services in 2010, the VAT effect allowed for an
additional increase by 1,5% in the number of jobs in the sector, compared to the distribution sector.
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“The hospitality industry is a perfect example of how low VAT
helps tourism to boost youth employment, facilitate social
inclusion and promote apprenticeships.”
István Ujhelyi, Member of the European Parliament, Vice-Chair of the TRAN Committee
“With nearly 34,000 enterprises, hospitality businesses are the keystone of the Flemish
tourist system. The federal measure to apply a lower VAT rate on food certainly contributes
to the economic resilience of our hospitality companies and as such also benefits our entire
tourist destination.”
Mr. Peter de Wilde, Administrator-General Visit Flanders and President of the European Travel Commission
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HOTREC - Report on the benefits of low VAT on job creation and competitiveness in the European Union