The tourism industry, backed by MPs from all parties, has launched a major campaign to cut VAT on hotel accommodation and tourist attractions to 5% in a bid to give Britain’s regions a helping hand.
Hundreds of companies big and small have been calling on George Osborne to make the change to enable the many regions dependent on tourism to invest in jobs and offer a better deal to tourists who can find cheaper holidays abroad.
The Sun, Britain’s best-selling daily newspaper, is today backing the push with Give Us A Break, a campaign highlighting how Chancellor George Osborne can give Britain’s hard-pressed regions a knee-up that will benefit everyone over the long term.
Experts predict the change could create more than 120,000 new jobs.
Tourism chiefs, together with a growing army of MPs, are calling on Mr Osborne to reduce the rate of VAT on hotel accommodation and attractions to 5% - which EU law enables it to do freely. This would make domestic holidays cheaper for Britons and the UK tourism industry more competitive internationally – in the face of the strengthening pound pushing people to head abroad.
Thousands of supporters range industry bodies such as the BHA and BALPPA, to small B&Bs, family run attractions, zoos and major international brands.
As tourism is an extremely price sensitive industry, a reduction in VAT to levels competitive with all the other countries in the EU would make the UK much more attractive to foreign tourists and would create thousands of new jobs, many of which would be suitable for the unemployed.
For every additional jumbo jet that arrives in the UK from China, £1m is added to the UK economy, £200,000 goes to the Exchequer and 20 full time jobs are created.
The tourism sector currently runs a £17billion deficit because five British people go abroad on holiday for every two foreign visitors who come in. This situation will only worsen as the pound gets stronger.
Britain is now only one of four European countries to not have cut holiday taxes – and one of them, Lithuania is cutting its VAT next year.
While the UK government insists on charging all holidaymakers with 20% VAT, countries like Portugal, Holland and Belgium levy just 6% tax on all hotels, holiday camps and tourist attractions.
France and Spain charge 10% tax on staying in hotels and holiday parks, while VAT in Germans hotels is just 7%.
As a result, a one-week family holiday in a mobile home in a holiday park in south-west France costs nearly £150 less than an identical holiday on Britain’s South Coast at Bognor Regis.
Graham Wason, Chairman of the Cut Tourism VAT campaign, said:
“This campaign is about more than just tourism – it’s about the people, communities and jobs driven by it right across the country. Ministers need to take a long term view and it’s clear that cutting VAT will offer a vital lift to many areas that have been forgotten for far too long.”
Nick Varney, Chief Executive of Merlin Entertainments, says:
“We have a fantastic tourism product in this country, with the most beautiful countryside, beaches, landscapes and premier league attractions. There are also really good accommodation providers out there from superb hotels to brilliant B&Bs. Let’s try and give them a break and do something good for the economy.”
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 said:
“This is about helping put British firms on a level playing with Europe and enabling them to invest more in communities, create more jobs and offer lower prices. Currently, we incentivise people to travel abroad – something amplified by the strengthening pound. As an island, it’s no wonder so many regions depend on the sector and we hope Mr Osborne will give us all a break in his next Budget.”
InterContinental Hotels Group said:
"Anything which encourages tourists to visit the UK is good news for British business. We need to make sure we remain competitive both on the world stage and with our European neighbours.”
Geoffrey Cox, MP for Torridge and West Devon (Con), says:
“It is going to send an electric shock of aid and assistance and support for the domestic tourism industry. That’s what we need to do, it’s a vital industry for the South West and that’s why I am urging the government to take action.”
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.”