Parties come together for debate on tourism VAT

Martin Couchman OBE Deputy Chief Executive British Hospitality Association

Martin Couchman OBE
Deputy Chief Executive
British Hospitality Association

There was an excellent turnout of MPs this morning for the first ever parliamentary debate on VAT on tourism. Nearly 30 MPs from across the UK and from all sides of the political spectrum came together to put pressure on Treasury Minister David Gauke MP to reconsider the government’s reluctance to reduce VAT, initially on visitor accommodation & attractions.

Please find below the official press release from the Cut Tourism VAT campaign of which we are leading members. You can see the whole debate on the Parliament TV channel here. We will send out a Business Update later this week with the names of all the MPs who spoke in the debate. If this includes your MP, please contact them to thank them for their interest and support.

 

Martin Couchman OBE
Deputy Chief Executive
British Hospitality Association

 

London, 11th February 2014: More than 28 MPs from all parties united in Westminster today to urge the Government to reduce VAT on the tourism sector.

This follows a high level campaign by the tourism industry as 24 out of 28 EU countries such as France and Spain enjoy vastly reduced tourism VAT unlike the UK where we still pay 20 per cent.

In a Westminster Hall debate in the House of Commons today, MPs urged the Government to cut the rate to 5 per cent because British holidaymakers are paying almost twice or more as much VAT compared to breaks in France, Germany, Italy and Spain.

Simon Hart, MP for Carmarthen West and South Pembrokeshire, urged the Treasury to rethink their stance on a reduction on VAT: “It seems to me we have a situation where it is the Treasury versus everybody else ... and it can’t be completely true to suggest that the Treasury is always right and the experts in the industry are always wrong. The circumstances have changed because of the weather but they have also changed over a longer period of time because of the improved economic conditions and because of the evidence that has been put before us by experts in this particular field. I would suggest that the Treasury take into account these changing circumstances.”

Margaret Ritchie, MP for South Down, who called the debate, said: “To have a reduction in VAT is very important from a tourism point of view from the perspective of economy and jobs. Tourism is an absolutely vital industry for our islands, providing 10% of the GDP and supporting over two million jobs in the UK.”  

Despite coming under pressure from the 28 MPs who attended the debate, Treasury Minister David Gauke refused to accept independent evidence provided by the industry that a VAT reduction would quickly lead to more jobs and increased tax revenue.

Further research by a Treasury adviser, Professor Adam Blake - who used the Treasury’s own economic model - concluded that cutting tourism VAT is "the most efficient, if not the most effective, means of generating GDP gains at low cost to the Exchequer that I have seen with the CGE model."

The Intercontinental Hotels Group’s Chief Operating Officer UK & Ireland, Stephen McCall said: "The current rate of VAT on visitor accommodation and attractions undermines our sector's ability to compete. A cut in the rate of VAT will encourage more UK residents to take short breaks here and encourage more foreign travellers to visit the UK. Tourism has created a third of all new private sector jobs since 2009 in spite of the VAT rate. We'd like to be able to fulfil our potential."

Nick Varney, Chief Executive Merlin Entertainments plc said: "It is disappointing that despite very compelling arguments Government still seems unable to grasp the importance and positive impact of a VAT rate decrease in the tourism and hospitality sector.  However it is encouraging that the debate took place, and our messages are beginning to find wider support.   We need now to build on that, and continue the fight. "

Graham Wason, Chairman of the Cut Tourism VAT campaign said: “We are delighted at the all-party support shown for reduction in this first debate on Tourism VAT in parliament. It was a fantastic turnout of 28 MPs. All except the Minister responding were convinced of the need for a cut on VAT for visitor accommodation and attractions and many references were made to evidence, using a Treasury approved financial modelling system, the positive impact for the UK economy this would have.”

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