THE GOVERNMENT IS reportedly weighing a so-called ‘city tax’ for Dublin hotels.
Officials in other European capitals like Paris, Berlin and Amsterdam already impose a similar measure, charging hoteliers either a flat fee or a percentage of room prices.
According to a report in the Irish Independent, such a tax could be introduced in Dublin as an alternative to ending the tourism industry’s 9% VAT rate.
The Department of Finance is concerned about continuing the preferential VAT rate – which has been reduced from 13.5% since 2011 – now that Dublin hotels are full most nights of the year with average room rates surpassing pre-crash prices.
While ending the tax break could yield an extra €500 million for the exchequer, such a move would be deeply unpopular.
The hotels lobby has warned that restoring the higher rate could hurt regional businesses, which haven’t seen the same boom as business in Dublin.
The Independent reported that a city tax could be used by government officials to punish Dublin hoteliers guilty of price gouging, particularly around major events.
However, the tax would likely be passed on to tourists, which could damage the capital’s already stretched value-for-money offer – particularly with the fall in the value of sterling.
With that in mind, we’re asking Fora readers this week, Should a ‘city tax’ be brought in for Dublin hotels?