The debate on introducing a tourism tax in Ireland, often referred to as an accommodation levy, visitor levy, or hotel bed tax, has gained significant traction by June 2025, driven by local government proposals in Dublin and Galway, international precedents, and the need for new revenue streams to fund urban and tourism infrastructure.
The discussion centres on balancing economic benefits from tourism with the potential drawbacks of additional costs for visitors, particularly in the context of Ireland’s recovering tourism sector.
The Irish Cabinet has discussed the issue and Taoiseach Micheál Martin has come out in favour of the tax, with a specific focus on a proposed levy in Dublin, reflecting a growing interest in aligning with global trends while addressing local concerns.
Dublin taskforce report
The debate has been spurred by the Dublin City Taskforce Report (October 2024), which recommended a tourist tax to fund city centre improvements, estimating costs of €750m to €1bn, plus €100–150m annually. The report highlighted the potential to raise €12m yearly in Dublin through a hotel bed tax. Galway City Council has also explored the idea, estimating €2m in annual revenue, though this is less than a third of its 2024 Local Property Tax (LPT) revenue.
The discussion is complicated by the fact that local authorities in Ireland lack the legal power to introduce new taxes without primary legislation from the national parliament, necessitating Cabinet approval and legislative changes. The Irish Cabinet is scheduled to discuss an implementation report on the Dublin City Taskforce’s recommendations, including the tourist tax, in late June 2025, indicating a pivotal moment in the debate.
The concept of a tourism tax in Ireland involves levying a charge on short-term stays in accommodations such as hotels, guesthouses, B&Bs, hostels, campsites, and short-term lets (e.g., Airbnb). The tax could be a fixed amount per person per night or a percentage of the accommodation cost, typically collected by the accommodation provider and remitted to local or national authorities.
Proponents argue it could fund tourism development, environmental protection, and infrastructure improvements, particularly in high-traffic areas like Dublin and Galway. Critics, including some government ministers and industry groups, warn it could harm Ireland’s tourism competitiveness, drive visitors to alternative destinations, and exacerbate cost pressures in the hospitality sector, which already faces a high VAT rate of 13.5pc compared to the 9pc rate during the Covid-19 pandemic.
Dublin
In Dublin, the push for a tourism tax has been led by Fine Gael TDs, notably James Geoghegan, who has engaged with hoteliers and ministers to advocate for its examination. Geoghegan shared, “I’ve actually had a lot of off-the-record discussions with some of the major hotel sectors in Dublin City and what they say to me off-the-record is that look, ‘a couple of euro on a hotel bill is fine, but if you show us what the return on that investment is’.”
This reflects cautious support from Dublin’s hotel lobby, provided funds are transparently allocated to city improvements like enhanced security (e.g., deploying 1,000 additional gardaí).
However, opposition comes from senior Coalition figures, including Tánaiste Simon Harris and Minister for Tourism Patrick O’Donovan, who argue it could deter tourists. O’Donovan shared, “They’ll stay in Wicklow, they’ll stay in Kildare and maybe go to Cork, or go to Limerick or Galway, and wouldn’t that be totally unproductive for the Dublin tourism industry?”
The Irish Hotels Federation (IHF) also opposes the tax, noting that Dublin hotels already contribute €25m annually in commercial rates and levies, with a spokesperson sharing, “Hotels are already making an enormous contribution in terms of taxes, both towards central exchequer finances and supporting local authority services.” Dublin City Council’s earlier proposal for a 1pc hotel tax in 2023, which could have raised €12m, was not implemented, highlighting ongoing resistance.
Galway
In Galway, the debate is less advanced but gaining attention due to the city’s reliance on tourism, exemplified by events like the Galway Races and the upcoming TTRA Annual International Conference (24–26 June 2025).
Galway City Council estimates a tourist tax could generate €2m annually, a modest but significant addition to its budget. Local discussions, as noted in a 2020 Seanad debate, emphasize the need to support tourism-dependent regions like Galway, which face low off-season hotel occupancy (11–14pc). Senator Seán Kyne shared, “My constituency of Galway West is a good example… We are completely reliant on tourism.”
Galway’s tourism stakeholders, including the Galway Chamber, advocate for innovative measures to sustain tourism year-round, but there’s concern about additional costs deterring visitors, especially given the hospitality sector’s struggles with the 13.5pc VAT rate. Unlike Dublin, Galway’s debate focuses more on regional economic balance, with suggestions for varying VAT rates to support rural areas, though a tourist tax remains under preliminary consideration.
International Examples
International precedents provide context for Ireland’s debate, demonstrating both the benefits and challenges of tourism taxes:
- Venice, Italy: Venice introduced a €5 day-tripper access fee in 2024 to manage overtourism and fund city maintenance. The tax targets day visitors, a model Ireland could consider for congested areas like Dublin’s Temple Bar. However, it has faced criticism for deterring budget tourists.
- Barcelona, Spain: A tourist tax of €3.25–€5.25 per night (depending on accommodation type) funds sustainable tourism and infrastructure. It has raised significant revenue but sparked debate about affordability, a concern echoed in Ireland’s hospitality sector.
- Amsterdam, Netherlands: A 7pc ad valorem tax on accommodation costs, plus a €3 per person per night fee, supports cultural preservation and public services. It’s a successful model but has led to complaints about high costs, a risk Ireland’s critics highlight.
- New York City, USA: A hotel room occupancy tax of 5.875pc plus a flat fee per night funds tourism promotion and infrastructure. It’s an example of earmarked revenue, which Dublin hoteliers support if funds are transparently allocated.
These examples illustrate how tourism taxes can fund local improvements but risk impacting competitiveness, a key concern for Ireland given its reliance on tourism (€9bn annually, employing 220,000).
Scottish Precedent
The Visitor Levy (Scotland) Act 2024, passed by the Scottish Parliament, provides a direct precedent for Ireland. It grants Scottish local authorities the power to introduce a tourist tax, with Edinburgh City Council planning a levy by April 2026 after an 18-month implementation period involving public consultation. Other councils, like Aberdeen, Argyll and Bute, and Highland, are also exploring levies.
The tax exempts groups like those receiving disability benefits and allows the Scottish Government to cap the number of taxable nights. This model is relevant for Ireland, where local authorities like Dublin and Galway lack similar powers, requiring national legislation.
The Scottish approach emphasizes community engagement and transparency, which Dublin’s Fine Gael TDs advocate by seeking clear allocation of funds. However, Scotland’s 18-month lead-in contrasts with Ireland’s faster timeline, with Dublin authorities suggesting a potential rollout by September 2025, pending legislative approval.
Irish Cabinet Discussion
The Irish Cabinet dicussed the Dublin City Taskforce’s implementation report, which includes the tourist tax proposal, following which Taoiseach Micheál Martin shared, “I’m not opposed to ‘hotel bed tax’ as one way to fund Dublin city revamp.”
This marks a shift from earlier resistance by Fianna Fáil, though Housing Minister Darragh O’Brien remains opposed, sharing, “Increasing costs in hospitality would be ‘the last thing’ I want to see.”
The discussion, scheduled for late June 2025, will likely address enabling legislation, given local authorities’ limited powers, and weigh the tax’s impact on Ireland’s tourism competitiveness against its revenue potential (€12m for Dublin, €2m for Galway).
The Cabinet’s deliberation follows the Commission on Taxation and Welfare’s 2022 recommendation for an accommodation levy and aligns with the EU’s Short-Term Rental Regulation (effective May 2026), which may influence related policies like short-term letting registers.
Broader Context and Challenges
The debate reflects broader tensions in Ireland’s tourism and hospitality sector, which contributes €9bn annually but faces challenges like high VAT rates, accommodation shortages due to refugee housing, and Dublin Airport’s passenger cap.
The Vintners’ Federation of Ireland, led by CEO Pat Crotty, opposes additional costs, sharing, “For pubs to survive our members needed to hear that VAT would be lowered to 9pc along with a reduction in excise duty.”
Rural TDs like Mattie McGrath emphasize the sector’s importance outside Dublin, sharing, “With 69pc of this industry located in rural Ireland, its health is crucial not just for local economies but for the national economy as a whole.”
The Scottish model’s success hinges on local flexibility, which Ireland’s centralized system lacks, complicating implementation. International examples show revenue potential but also risks of deterring tourists, a concern for Galway and Dublin given their tourism reliance.
