Backbench rebellion: 60 MPs support cut tourism VAT calls

Politicians from across the UK have come out in support of the Cut Tourism VAT campaign, which wants VAT on hotels and attractions to be cut to 5 percent.

The hospitality and tourism industry has come together in a bid to drive investment and jobs in regional towns. It is set to launch new research next week which will further underline its economic case.

The aim is to make Britain more competitive, cut prices and create over 120,000 jobs while adding around £4bn to economic output. There would be an initial hit to the Treasury but this would be made back inside on parliamentary term.

Now ministers have been forced to admit that the change can be made without prior approval from the EU after it was revealed that the majority of EU states have all cut their holiday VAT rates (see attached report).

As well as a public campaign, bolstered by support in The Sun this week, a parliamentary motion tabled two weeks ago by Margaret Ritchie, SDLP MP for South Down, has also generated support in Westminster.

Holiday-makers in Northern Ireland – where Game of Thrones was filmed - face the ridiculous situation of paying 20% VAT but only 9% when venturing south into the Republic of Ireland – which has used its right to make the cut.

 

The EDM can be viewed here: http://www.parliament.uk/edm/2014-15/40

It says:

  • Tourism-related businesses lie at the heart of the local community and economy;
  • 24 (soon to be 25) out of 27 EU member-states, including the Republic of Ireland, take advantage of a reduced rate of VAT for tourism, increasing investment and jobs;
  • As a result many UK regions depending heavily on tourism suffer a significant competitive disadvantage against EU states;
  • Research using HM Treasury modelling showed increases in UK GDP by up to £4 billion each year;
  • Calls on Government to introduce a sector-specific VAT reductions for tourism-related products, including accommodation and attractions, recognising such a move would strengthen the wider economy, support job creation and generate investment in local businesses

 

Margaret Ritchie, MP for South Down (SDLP), said:

“London has benefited hugely post-Olympics, but towns right across Britain and Northern Ireland have a lot to contribute to the economic recovery. Cutting VAT on hotels and attractions will enable the many towns reliant on tourism to grow faster and support the excellent work the sector already does employing young and low-skilled people.

“Ultimately, we are an island and in an increasingly global marketplace we cannot continue to price ourselves out of the equation for tourists who may choose between Europe and Britain and Northern Ireland for their holiday. The high level of VAT at home also leaves us in the ridiculous situation where it’s cheaper for people in Northern Ireland and Britain to fly abroad – which is bad news for the environment, the economy and our balance of payments deficit.”

 

Paul Maynard, MP for Blackpool North and Cleveleys (Con), says:

“I have been a big supporter of this campaign and have made my points very clear to successive ministers.  I believe by cutting VAT we will increase levels of incoming tourism, making the United Kingdom much more attractive to visit.  Incoming tourism is new money into the economy of this county and should be encouraged where possible.”

 

Martin Caton, MP for Gower (Lab), says:

“Providers of tourism-related services in my Constituency of Gower look to their colleagues on the other side of the Irish Sea and see the positive impact of lower VAT rates in stimulating local businesses. I have no doubt that the reduction of VAT for the tourism industry in the UK would have significant economic and employment benefits.”

“Providers of tourism-related services in my Constituency of Gower look to their colleagues on the other side of the Irish Sea and see the positive impact of lower VAT rates in stimulating local businesses. I have no doubt that the reduction of VAT for the tourism industry in the UK would have significant economic and employment benefits.”

 

Graham Wason, chairman of the CUT Tourism VAT campaign, said:

“Margaret’s efforts to highlight this important issue will echo support from every corner of the UK. It’s no coincidence that being an island makes ours a very tourist-focused economy which is why we need to overcome the startling anti-competitive stance we currently take.”

 

Best Western

“By reducing VAT to 5% the boost to the hospitality industry would open up more job opportunities, many of which would be for the under 25s. This is a key objective for the BHA and one which we fully support.”

 

Dermot King, managing director at Butlins, said:

“We need to recognise that tourism isn’t just the country’s biggest employer of young people or the social heart of hundreds of towns, but the economic driver of many British regions. This is about investing in the future of those areas - where hotels and attractions are potentially the lifeblood of economic recovery - so that our improving business climate can benefit everyone and not just the South East.”

 

Thomas Dubaere, Managing Director of Accor UK & Ireland, says:

“While the UK is a highly desirable destination for tourists, the current rate of VAT, which is double the European average, discourages a large number of potential visitors and prevents the industry from achieving its true potential. A cut in the rate of VAT for tourists would bring significant benefits for thousands of hospitality related businesses across the entire country, create much needed jobs and be a major boost for the wider British economy.”

 

Ufi Ibrahim, Chief Executive of the British Hospitality Association, says:

“Tourism is a great British success story but we are missing out on tourists because of the high VAT rate. Tourism is the only export industry to pay VAT, and cutting the rate to five per cent will allow us to compete effectively with our international rivals and boost growth. Securing this VAT cut will help provide young people with jobs when one in five 16-25 year olds are currently unemployed.”

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One Response to “Backbench rebellion: 60 MPs support cut tourism VAT calls”

  1. Eric O Connor

    It is obviously clear that is the if our offering in the United Kingdom is subject to a 20% VAT charge investment and profitability is more difficult by comparison to our European neighbours paying 5%, in the majority of case the extra funds would be put into improving and developing the business and being generally more competitive in a very tough marketplace, with 75% of our business being tourist to the area.

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