In a submission to the Chancellor of the Exchequer ahead of the Autumn Statement industry leaders have put the case that a reduction of VAT would help boost exports and reduce the trade deficit.
The submission summarises the economic evidence in favour of a reduction and cites Visit Britain analysis that between 2006 and 2011 the UK lost market share in 28 out of its top 33 markets by visitor volume. Tourism is sixth-largest export earner for the United Kingdom and the only sector whose exports are subject to VAT.
The most recent research on Tourism VAT, using HM Treasury’s own economic model, found that a reduction for accommodation and attractions would be revenue neutral and contribute £4 billion each year to the UK economy.
Nick Varney, Chief Executive of Merlin Entertainments plc said: "The Government is currently promoting its export credentials but has failed to recognise that tourism is an export sector. It has loaded tourism with taxes, such as VAT, and increased other barriers to a point where we are now losing market share to our rivals.
“Price competitiveness is the single biggest obstacle to more international visits and more people holidaying in the UK. A reduction in VAT on tourism would go a long way to improve our international standing and help ease the cost of living burden for staycationers."
Dermot King, Director of Bourne Leisure, said: “Government is currently asking the UK tourism industry to compete with one VAT-arm tied behind its back.
”Youth unemployment remains stubbornly high and nearly a million young people are unemployed. Our sector is a major provider of jobs and careers for young people, and we would be able to offer a greater number of opportunities if Tourism VAT was brought into line with our EU rivals.”
Graham Wason, Chairman of the Cut Tourism VAT campaign said: “A significant prize in terms of growth and employment will be won by the Government which reduces Tourism VAT. In addition the Chancellor will be known as the politician who finally gave British families the opportunity to enjoy UK holidays taxed at a competitive rate with holidays abroad - a level playing field with mainland Europe at last".