McHugh hails retention of reduced VAT rate for Donegal hospitality industry

Minister Joe McHugh
Minister Joe McHugh

Donegal TD and Government Chief Whip Joe McHugh says he is delighted with a decision of Cabinet today to retain the 9 per cent VAT rate on the hospitality industry.

Some Opposition TDs wanted to raise the rate back to 13.5 per cent.

But the Fine Gael cabinet Minister says Government has recognised how the reduced rate has driven jobs growth and the tourism industry.

He also welcomed tax cuts for lower and middle income earners, the reduction in the pupil-teacher ratio creating hundreds of new positions and the fact this Government is balancing the books of the country for the first time in a decade.

“I have lobbied hard within the Cabinet and within Government for the VAT rate to be retained at 9 per cent,” said Minister McHugh.

“Nationally this decision in 2011 has created 40,500 jobs in the hospitality and tourism industry with many many hundreds of those in County Donegal.

“The Minister for Finance and Public Expenditure understood how important tourism is for counties like Donegal and that the retention of the lower rate is key for hotels, cinemas and restaurants.

“With the continuing decline in the value of Sterling over the euro, this decision is key to Border counties like Donegal. While prices in Dublin continue to rise, it was agreed that any change in the rate could impact on the tourism sector outside the capital.

“I know from speaking to all those in the tourism sector – including those in re-opened hotels and restaurants right across the county – that this decision is key to their future growth.”

Minister McHugh said changes in income tax today are designed to help low paid workers with the second rate of USC reduced from 2.5 per cent to 2 per cent and the third rate reduced from 5 per cent to 4.75 per cent.

“The ceiling on the second rate is being increaed to €19,372. A full-time worker on the minimum wage will see their annual income increase by €608 as a result in the increase in the minimum wage from €9.25 per hour to €9.55 per hour.

“As a result of the tax changes married one-earner couples with two children with a total of income of €55,000 will benefit up to €8 per week if an employee and €11 per week if self-employed.”

An additional 800 gardaí and 500 civilians will be added to An Garda Siochana in 2018. There will also be 1,300 additional teachers in 2018 and 1,000 new special needs assistants posts as the pupil-teacher ratio is reduced to 26 to 1.

There will also be an extra €685M for the health service, taking annual funding to €15.3 Billion. Social welfare payments are to increase by €5 per week. Charities will also be able to claim VAT back.

Deputy McHugh, who is also Minister for Gaeilige, the Gaeltacht and the Islands also announced his own department is to receive a 4 per cent increase in funding to €62.5M in 2018.

The extra €2.5M - which is on top of a €2.5M this year - will help promote Irish across the country.

Minister McHugh said: “I am particularly pleased with the additional €1.4m which has been provided to support the language planning process.

“Last month, I announced that the first three Gaeltacht language plans had been approved in Donegal and Galway allowing those plans to move on to the most important phase of the language planning process, that being the implementation of the language plans.

“This additional funding will be vital as more language plans are approved and move into the implementation phase over the coming year.”