The UK Government is coming under pressure from operators in the tourism industry to cut VAT, following a turnaround in visitor numbers to the Republic of Ireland. Growing visitor numbers have followed an adjustment in the VAT rate for holidays from 13.5 per cent to nine per cent.

The latest figures show 1.77m visitors flocked to the Emerald Isle between March and May this year. And of these, 726,000 were from the UK – an increase of almost six per cent over last year.

Now operators in the UK are demanding similar assistance to reinforce growth in the British travel market.

The reason for the turnaround in Irish fortunes was explained by Michael Vaughan, president of the Irish Hotels Federation: “The government’s decision to reduce VAT, albeit by a small percentage in July 2011, has provided a stimulus for hotels and guesthouses.”

The news comes at the same time as the Cut Tourism VAT campaign which is rallying support in key UK tourism destinations. The initiative is calling for the implementation of a reduced VAT rate for the sector.

The differential is proving challenging for tourism businesses in Northern Ireland. Janice Gault, chief executive of the Northern Ireland Hotels Federation said: “The lower rate of tourism VAT in the Republic of Ireland is a challenge for hotels in Northern Ireland.

“Our hotels offer excellent quality and value for money, but we struggle to compete against those over the border which charge less than half the UK rate of VAT. The UK Government needs to recognise the value of our industry and help us compete on a level-playing field within Europe.”