Tourism chiefs have given a broadly positive, but still mixed reaction to this week’s Budget 2026 measures outlined by the Government on Tuesday.
As had been expected, Finance Minister Paschal Donohoe announced a lowering of the VAT rate for food -serving hospitality businesses from 13.5% to 9%. This had been called for but a wider scope had been hoped for and an inclusion of the likes of caravan parks, visitor attractions and adventure holiday operators in the tax net.
The Government said the measure announced will support more than 150,000 jobs across the country.
The Irish Tourism Industry Confederation (ITIC) broadly welcomed Budget 2026.
Eoghan O’Mara Walsh, CEO of ITIC, said: “Government have acknowledged the difficult trading environment of the hospitality sector and although we’d like to have seen the restoration of the 9% VAT rate from the start of the year it is very welcome that it will come into effect on July 1st”.
“ITIC also note the modest increase in tourism budgets which should help agencies support the industry and help the sector market diversify. Tourism is the largest indigenous industry and biggest regional employer in the country. The sector is having a challenging year with mixed demand and squeezed margins and Budget 2026 is a step in the right direction”.
The Irish Hotels Federation (IHF) also welcomed the reduction in VAT for food services as part of Budget 2026.
IHF President Michael Magner said: “The lower 9% VAT rate is a crucial intervention for struggling food service businesses the length and breadth of the country at a time of enormous challenges and unsustainable increases in operating costs.
“This measure goes a long way toward putting Irish tourism on a more stable footing, aligning Ireland’s VAT rate for hospitality food services with the majority of our European competitors. This is essential given the significant social and economic contribution our industry makes, supporting over 270,000 livelihoods. More than 70% of these roles are outside Dublin, making our industry a key driver of regional employment, economic diversification and rural development.
“Given the ongoing challenges facing our sector, including serious cost-competitiveness issues, we are calling for this reduction to be made permanent in order to provide greater long-term certainty to those businesses that are heavily reliant on food services.”
Mr Magner also welcomed the additional allocations in Budget 2026 for Fáilte Ireland and Tourism Ireland.
He said: “This increased funding for both State agencies reflects the vital role they play in developing and expanding our tourism product and market reach in what is an exceptionally competitive global environment. It will ensure that we are well placed to build on the great work done to date promoting Ireland as an attractive tourist destination.”
