The BHA recognizes the high rate of VAT on hospitality services, compared to those of all but two other EU member states, is a significant deterrent to national growth and job creation.

Member states of the EU recognise that tourism is an extremely price-sensitive sector, subject to intense international competition; as a result, all but two others (Denmark and Slovakia) have a reduced rate of VAT on accommodation.  They recognise that the direct revenues foregone as a result of the reduced rate concession are compensated by the additional demand that reduced rates generate, and the creation of new jobs.

France has a reduced rate on accommodation at 5.5 per cent (which is now applied to restaurant meals); Germany’s rate is seven per cent and Italy’s rate is 10 per cent.   Fourteen other countries have also introduced a reduced rate for restaurant meals and for admission to amusement parks.

Note:  This table is simplified; some countries have variations in their rate for particular items and services; most countries do not reduce the rate of VAT on alcohol taken with meals even if there is a reduced rate for the meal itself.

The latest country to reduce VAT on hotels, restaurants and other tourism establishments is the Republic of Ireland, where VAT is being reduced to nine per cent from 1st July 2011 until December 2013.  This reduction, from the already low 13.5 per cent, as well as the proposed suspension of the air travel tax, will make Northern Ireland’s tourist industry, in particular, even more uncompetitive.

Tourism Regulation Task Force
Implementing the rising number of UK rules and regulations costs management time and money.  The BHA believes that the regulatory burden on the industry is onerous and that unnecessary red tape should be cut.   In conjunction with the government, the BHA has established the Tourism Regulation Task Force under the chairmanship of Alan Parker CBE, president of the BHA and the former chief executive of Whitbread plc. Working with industry experts the Task Force will look at all sectors of industry for examples of red tape which we can recommend should be repealed or amended in a number of different areas – employment, hospitality, food and drink (including health and safety), planning and travel.(including visas).   The Task Force would be happy to receive from members any suggestions of examples of red tape that should be repealed –  please send to martin.couchman@bha.org.uk