Enterprise Minister Simon Coveney said the government must look into a proposal for a tax on overnight stays in Dublin hotels.
A proposal for a hotel room tax is due to be presented to the Finance Committee of Dublin City Council this week.
The tax could bring up to 12 million euros, which would go towards the renewal of the city.
Mr Coveney said if the measure required legislation, the government would need to fully understand its implications and consequences.
He said hotel rooms in some parts of Dublin are very expensive at the moment due to lack of supply.
“So I think we need to assess what’s the appropriate thing to do at the moment to try to keep hotel rooms affordable and also to ensure that hotels themselves remain in business,” he said, reports RTE.
He added that there are cities in different parts of Europe that levy a hotel room tax.
In a statement, the tourism ministry said any tax changes are the responsibility of the finance minister.
But it stressed that the Tax and Welfare Commission had recommended introducing a tourist tax.
“From a tourism perspective, this type of proposal is not straight forward, not least given the amount of revenue the tourism sector already generates for the Exchequer and the competitiveness problem such a change could potentially pose given our reliance on inbound international tourism,” it said, reports RTE.
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