Plans for a hotel bed tax on visitors to Dublin have reached an “impasse”, according to a senior official with Dublin City Council.
Elected members of the council came out in favour of the controversial proposal earlier this year after a report showed that over €12 million could be raised annually through the introduction of a 1 per cent tax or levy on tourist accommodation charges in the capital.
However, the council’s head of finance, Kathy Quinn, has admitted that the introduction of a hotel bed tax in Dublin cannot be progressed without new legislation being passed by the Government.
“We need for the Government to give powers to local authorities to set a charge,” said Ms Quinn.
She told a recent meeting of the council’s Economic Development and Enterprise Committee that similar taxes are being planned in Scotland and Wales with their national governments bringing in legislation to allow local councils to impose a charge.
“We’re not at that point,” said Ms Quinn. “We’re at an impasse really in terms of where we go with this.”
She said hotel bed taxes or similar charges were already well established in a number of jurisdictions.
Ms Quinn said one example was Amsterdam where research had demonstrated that there was no price sensitivity to the introduction of a tax on visitor accommodation.
“They found increases in the tax were not going to stop tourists coming,” she added.
In reply to a question from Labour councillor, Alison Gilliland, Ms Quinn said reports about the proposal for a hotel bed tax had been sent to both the Department of Finance and the Department of Housing, Local Government and Heritage.
However, she said both seemed to indicate it was an issue for the other department.
Ms Quinn acknowledged that there had been a lot of reaction to the proposal with some views that a hotel bed tax would not be “a helpful initiative.”
“I think if it’s seen to be not just a Dublin thing, it might be seen to be more acceptable,” she remarked.
In a report prepared for a meeting of the council’s Finance Committee on Thursday [tomorrow], Ms Quinn said the council does not have the legal capacity to introduce a hotel bed tax “as it stands.”
From recent discussions with Amsterdam City Council, Ms Quin said the tourist tax introduced in the Dutch city in 2012 has been successful “with little opposition.”
“It is accepted that residents and businesses of Amsterdam pay for the maintenance and upkeep of many facilities enjoyed by tourists such as road and cycle networks, parks, cultural institutions, events, water and drainage.”
Ms Quinn said it was an accepted argument in the Netherlands that it is “wholly reasonable” to ask tourists to contribute towards the costs associated with aspects of the place they are visiting.
The committee will also be told that the Welsh government is preparing legislation to give local authorities in Wales powers to introduce a visitor levy, which was a commitment given in its programme for government.
Ms Quinn has proposed that the council’s Finance Committee should again request the Government to start a process to consider and implement a visitor accommodation tax given how similar charges operate “maturely” in cities like Amsterdam.
A report published earlier this year showed that a tax or levy based on 1 per cent of the cost of accommodation in hotels in Dublin could raise €12.2 million in a full year based on an average occupancy rate of 78.5 per cent and an average room rate of €171 per day.
The Commission on Taxation and Welfare, which sought to identify how the tax and welfare systems can support economic activity and promote increased employment and prosperity in Ireland, also recommended the introduction of an accommodation tax in a major report published last year.
It pointed out that several European cities including Paris, Berlin and Vienna already have such taxes applied to hotel accommodation.
Rates across EU member states range between an average of €0.40 and €2.50 per night and vary depending on the type of accommodation.
The proposed tax is favoured by a large number of councillors in Dublin city who regard it as a potential new revenue stream to reduce the council’s dependence on rates paid by businesses.
