Debate contribution: VAT for Hospitality

Debate contribution by Mr Matthew O'Toole on 13 May 2024.

MLA

Mr Matthew O'Toole

Party at the time

Social Democratic and Labour Party

Date

13 May 2024

Type

Debate contribution

Business

Opposition Business

Heading

VAT for Hospitality

Assembly identifier

Official Report component 4489484

Read the official Assembly record

Text

Thank you, Mr Deputy Speaker. I thank everyone who participated in the debate. It has been thought-provoking and colourful, which is always fun. I have never experienced a situation like this. Clearly, in opposition, we are winning friends and influencing people. A succession of people got up to slag us off and then said that they would agree with our proposal, so we are making some progress. I will reflect on some of the comments made. I think that there is broad consensus that hospitality and tourism are disproportionately important economic drivers for this region. That is obvious. We all know that the tourism offer in Ireland as a whole is unique and special. We are deeply proud of it, and it is tied into deep cultural and communal things that we cherish. It is also the case that we have not provided enough support, certainly in more recent years, particularly for some of the smaller, family-owned businesses as they struggle with increased costs. There are associated social benefits with them that are not simply about inward tourism to Northern Ireland but are societal and communal benefits. Before I touch on a few of the comments, it is important to say that a few Members commented on the fact that we are calling for the devolution of VAT for hospitality and implying that that would necessarily mean that VAT would definitely be devolved and would definitely be lowered.

We definitely need to look at those things, and there are strong arguments for them, but our motion is very careful not to call for a specific proposal that will cost x amount, unlike some Executive party motions that I could mention. Since Mr Nesbitt —.

I will give way in one second. Since Mr Nesbitt and Mr Brett both raised the issue of cost, I will say that recent studies suggest that the cost of lowering hospitality VAT to 5% could be about £16 million annually. Obviously, that would be significantly less if it were to simply equalise VAT with the lower rate in the Republic, which is 13·5%, so it would probably be closer to a figure in the single millions of pounds. That, however, would all be subject to policy rotation. We are not saying that it should definitely happen; we are saying that it should be brought forward for consideration. I will give way briefly to Mr Nesbitt.

The Member quoted the Irish Congress of Trade Unions, and its input is welcome. We maintain a close and positive relationship with the Irish Congress of Trade Unions. On this occasion, we think that there are strong arguments for examining this policy. Of course, interest groups will occasionally disagree with particular policy proposals. This is a specific proposal that we think should be examined, but we are not, as the Member acknowledged, saying anything definitively. There are, however, strong arguments for an examination. Paul Frew mentioned some of my previous work on licensing. I tabled some amendments, which passed, on licensing. It is true that one or two people registered concern, and they were relatively cautious amendments that just reviewed how the licensing system works. It is intriguing to hear Mr Frew criticise them now. He may not be aware — we were using proxy voting at the time — that he voted for my amendments.

As Peter Cook said:

"I've been distorted, I've been misrepresented, and I've been quoted accurately",

which is worst of all. On that note, I am tempted to quote a certain Mr Ian Paisley Jr, whom I do not quote that often. He is another North Antrim representative, along with Mr McGuigan and Mr Frew. He once stated that he wanted to:

"remove VAT on tourism and hospitality so that we can compete fairly with our land-border neighbour."

I would not necessarily talk about competing with our "land-border neighbour", but we have inevitably, rightly and positively integrated our all-Ireland tourism offer: some 70% of our visitors come via Dublin Airport. That is why Tourism Ireland exists and why we support extending the Wild Atlantic Way and, indeed, Ireland's Ancient East. The motion asks the Minister to look at the potential devolution of VAT. We have mentioned Dublin Airport and competing with our "land-border neighbour". There is an example of very bad taxation devolution — I see some of my colleagues across the Chamber are rolling their eyes — but it is true that the policy to devolve long-haul air passenger duty to Northern Ireland has generated precisely zero long-haul flights from Belfast International Airport, but we pay the princely sum of £2·5 million a year. If we moved the £2·5 million that we pay for phantom flights and used it to pay direct grants or pay for a VAT reduction for the hospitality businesses, that would be more impactful than paying for non-existent flights. The hospitality sector is critical. There is a clear argument for harmonisation, but, more broadly, there is an argument for support.

The motion simply calls for a package of support to be examined and I commend it to the Assembly.

849 words. Text as published by the Northern Ireland Assembly.

Assessment

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Assessed 21 October 2026 at 10:28 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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