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Prominent Killarney hotelier and IHF spokesman Tom Randles says the government’s proposed VAT increase on tourism-related goods could have major ramifications for the town’s tourist trade.

The rates for accommodation and food were lowered to 9% in 2011 to help promote job creation. However, a recent review of the VAT rate carried out by the Department of Finance said the measure had achieved its purpose and recommended that it be reset at 13.5%.

Speaking to the Killarney Advertiser, Mr Randles said that such a move would lead to higher prices for people visiting the town.

“If VAT goes up to the proposed 13.5% it would be very dangerous for the tourism industry, particularly in Kerr,” he said.

“It may dampen demand if prices increase. If the market was to tighten up it would be very bad for Killarney. The VAT rate was lowered to 9% in 2011 and that was a great success.

“The current rate is normal in Europe,” he added. “10 other EU countries have a rate of 10% or lower.”

The proposed VAT hike would predominantly affect the larger hotels as most B&Bs are not registered for VAT.

Earlier this year, the TEIR 1 tourism report revealed that 1.1 million visitors come to Killarney annually and the vast majority stay overnight. An increase of 30% is expected before 2025 but if the VAT rates return to 13.5% as proposed, those figures may have to be revised.