Date and time
In May 2011 the Government announced a Jobs Initiative which involved a series of measures to boost employment. A key aspect of the Jobs Initiative involved a reduction in the rate of VAT which was targeted mainly at labour intensive goods and services relating to tourism. In this context, a new temporary second reduced rate of VAT at 9% was introduced with effect from 1 July 2011 until end-December 2013. The paper uses price and employment data for the year following the introduction of the measure to examine whether the reduced rate has been passed through to consumer prices and whether the desired jobs impact materialised. The analysis provides evidence of price pass through to consumer prices and evidence of an employment impact through a net increase in jobs in the accommodation and food services sector.