Good points... let me go through them:
1) If the purpose of VAT,as with any tax, is to increase revenue for the state then this will have the opposite effect.
Like any government, the Irish one is completely ignorant of this fact. New taxes are always introduced as if the taxable amount was completely unaffected by them. Of course a new charge will mean the base (travel agent sales in this case) will go down. Still, the government *may* make some money if the decrease is not too large. This is very difficult to predict though.
2) Even more weird is this :- the VAT is only charged on fees/profit for travel services to destinations within the EU. vat AT 21.5%.
The logic on this one is beyond me. It is kind of like the leave-the-country tax that is lower if you are fleeing via the western UK (€2) as opposed to anywhere else in Europe (€10). But hey, does this not actually give lazy travel agents (as you said yourself before, there are plenty of those) a kick, forcing them to finally stop just clicking on websites and booking Aer Lingus flights for people, instead concentrating on the still lucrative and much more difficult true overseas arrangements?
3) Incidentally, Shops charge VAT as you rightly state. But they get back the VAT they paid when they obtained the product from the factory/ wholesaler. We won't.
It may be organized differently but in the end, the result is the same: You do not pay VAT on the product you are selling (flight, hotel, car rental, ...). So it is as if you paid VAT on all that you charged your client and then got it back for the part that you just re-sold. I fail to see how this is any different from what shops do.
However its applied this VAT ruling will mean a loss of revenue to the govnt and the closure of businesses that will ultimately cost everyone more.
Cannot argue with this one. New taxes always have such effects. But with all governments starting to feel the burdens of their immense bank bail-out packages and stimulus programs, expect many more "creative" taxes in the near future.
4) The weirdest thing of all is I can set up an internet site in Bananaland selling packages to irish people to travel anywhere -they can pay by plastic- and there'll be no VAT hassle.
Such is the Internets. It opens up many new opportunities. High street travel agents die out, new Internet ones open up. The wheel of time keeps turning...