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    DHG   IE00BJMZDW83

DALATA HOTEL GROUP PLC

(DHG)
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Real-time Quote. Real-time Irish Stock Exchange - 10/18 11:30:27 am
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Dalata Hotel : Lower Irish tourism VAT rate a "deadweight" - finance department

07/31/2018 | 09:40am EDT
Cranes are seen along the skyline in the Irish Financial Services Centre in Dublin

DUBLIN (Reuters) - Ireland's lower VAT rate for tourism has become a "significant deadweight" on the economy and increasing it now will have no real adverse impact on the tourism sector, the finance department said on Tuesday.

A cut in sales tax for hotels, restaurants and other tourist businesses to 9 percent from 13.5 percent in 2011 helped lift a sector that was reeling from Ireland's financial crisis but is now benefiting from record visitor numbers and higher prices.

Finance Minister Paschal Donohoe said last year that he would decide the fate of the lower rate when a clearer picture of the impact of Britain's break with the European Union on the tourist sector emerged following a "very fine judgment call" to retain it for 2018.

Irish tourism grew by 6.7 percent in the first half of the year with the number of trips to Ireland from Britain returning to growth to partly reverse a fall last year as the weak pound made trips to the euro zone more expensive.

In a review of the rate published as part of preparations for October's budget for 2019, the finance department said the tourist board's diversification strategy away from the British market had mitigated any loss of competitiveness relative to British tourists and that this was likely to continue.

"The economic environment in which the 9 percent VAT rate operates has changed considerably since its introduction," the report said.

The rate is regressive and the accommodation and food services sector has seen the second highest average employment growth since it was brought in, it said.

"The consequence of this analysis is that the VAT rating applied to the tourism sector is less significant than may seem apparent."

The report said that at 490 million euros last year - over half the budgetary space currently available to Donohoe for yet to be allocated tax cuts and spending increases next year - the cumulative costs of the reduced rate are substantial and "point to significant deadweight".

It added that the government's commitment to retain the rate was conditional on prices remaining competitive. This was no longer the case and had led to a competitiveness problem that could add to overheating pressures in the economy.

While the taxation papers published by the department each year can only lay out options for the budget, its advice to consider hiking the rate of stamp duty on commercial property was implemented in full by Donohoe last year.

(Reporting by Padraic Halpin; Editing by Richard Balmforth)


© Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
DALATA HOTEL GROUP PLC 0.48% 4.2 Real-time Quote.10.44%
SPACE CO.,LTD. 0.11% 942 End-of-day quote.19.39%
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Financials
Sales 2021 182 M 211 M 211 M
Net income 2021 -38,1 M -44,2 M -44,2 M
Net Debt 2021 828 M 961 M 961 M
P/E ratio 2021 -24,3x
Yield 2021 -
Capitalization 936 M 1 086 M 1 087 M
EV / Sales 2021 9,70x
EV / Sales 2022 4,90x
Nbr of Employees 2 685
Free-Float 88,6%
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Mean consensus BUY
Number of Analysts 3
Last Close Price 4,20 €
Average target price 4,83 €
Spread / Average Target 14,9%
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Managers and Directors
Patrick Anthony McCann Chief Executive Officer & Executive Director
Carol Phelan Group Chief Financial Officer
John Hennessy Non-Executive Chairman
Seán McKeon Secretary, Head-Risk & Compliance
Margaret Sweeney Senior Independent Non-Executive Director