The Government should incentivise car rental companies in Ireland to rebuild their Covid-depleted fleets by reintroducing VAT relief on vehicle registration tax (VRT) for hire firms in Budget 2023 in September, according to a pre-budget submission by the Irish Tourism Industry Confederation ( Itic).
Recent reports of rapidly escalating costs for car hire in Ireland contributed towards a “significant adverse publicity” for the tourism industry here, Itic says in its submission, which was recently signed off by its governing council.
Some media reports at the outset of the summer estimated it could cost several thousand euro per week to hire a car in Ireland at the height of the tourist season.
Itic highlights in its submission that in 2019, up to 40 per cent of all holidaymakers who arrived in Ireland hired cars, providing them with easy access to the regions outside Dublin.
However, it says, car hire companies in Ireland were forced to sell off much of their fleets during periods of Covid restriction, resulting in a 50 per cent reduction in the number of cars now available for hire, pushing up prices.
“The price of car rental in Ireland this summer is an outlier compared to competitor destinations across Europe.
There is a real risk that Irish holiday bookings are not materialising due to the excessive cost of car rental. This will have a particularly negative impact on regional Ireland,” said Itic, whose members include the Car Rental Council of Ireland.
“Under-resourced car rental companies have to rebuild their capital base and it will take time for car rental companies to build car stocks back up to pre-pandemic levels.
The reintroduction of VAT relief on VRT on short-term car rental would help to incentivise a fleet rebuilding program which is critical to increasing supply.”
Itic also calls in its submission for the retention of the sector’s 9 per cent VAT rate, which is scheduled to expire at the end of next February. It also calls for the Government to maintain public spending on the industry, which last year totaled €288 million, excluding business Covid supports.
It also called for sustainability grants to be extended to tourism businesses to help them cope with the costs of going green.
Itic also wants the Government to increase the numbers of visas for non-European Union workers, to help alleviate the sector’s acute labor shortage, and to extend further support to the regional aviation sector.
Meanwhile, Chambers Ireland, the umbrella group for chambers of commerce, has called on the Government to focus on energy costs, skills shortages and the cost of housing in the budget.
“Ireland has spent most of the last fifteen years reacting to crisis after crisis. We need to accept that the world is far less benign than it was at the start of the 2000s and policy must become much more proactive in response,” it said.