The Campaign to Cut Tourism VAT welcomes the news that Jonathan Bell, Northern Ireland’s Minister of Enterprise, Trade and Investment and the acting Sports, Tourism and Heritage Minister David Evennett MP are working together to examine the benefit of a reduction in tourism VAT in Northern Ireland.
Cut Tourism Vat coordinators received the boost to the campaign with the news that the two ministers will consider evidence from the Republic of Ireland, which reduced the rate of VAT on the tourism and hospitality to 9% in 2011. This move delivered economic growth and the creation of 30,000 new jobs. A similar decision in Northern Ireland would help their tourism industry to position itself more competitively.
Tourism is a vital industry in Northern Ireland offering high numbers of entry-level positions, providing skills training particularly for young people and leading the way in enabling diversity. However, tourism in Northern Ireland is at a major competitive disadvantage compared to other EU countries, because VAT is applied at the standard rate of 20%, whereas nearly all other EU member states, including the Republic of Ireland, have implemented a reduced rate on visitor accommodation and, in many cases, on tourist attractions too.
This high VAT rate artificially stunts the industry, constraining job creation, economic growth and investment. Whilst tourism accounts for 9.5% of the Republic of Ireland’s GDP, in Northern Ireland this figure is less than half (4.5%).
SDLP MP for South Down and Chair of the APPG on the Visitors’ Economy, Margaret Ritchie, said: “I am delighted to welcome the Treasury’s announcement. The hospitality and tourism sector in Northern Ireland plays a key role in our economy but is disadvantaged by the competitive edge enjoyed by businesses in the Republic of Ireland. A cut to tourism vat could stimulate employment, boost visitor numbers to NI and enhance our economy. I look forward to the conclusion of this investigation by the Treasury and urge all parties interested in boosting the tourism and hospitality industries in Northern Ireland to continue to make the case for a cut in VAT.”
Dermot King, MD of Butlins and Chairman of the Campaign to Cut Tourism VAT said: "The Campaign is delighted by the joint call from Ministers in Northern Ireland, Scotland, Wales and the Department of Media, Culture and Sport to research into the impact of a reduction in the rate of VAT on Tourism by the Treasury.
"The Campaign will make available to the Treasury our extensive research and case studies which supports a reduction in the VAT rate to 5%. The Campaign has recently worked with former member of the Bank of England Monetary Policy Committee Dr Andrew Sentance CBE who found that reducing tourism VAT is the single most effective taxation reform for stimulating growth. He also concluded that the economic argument put forward by the Campaign is one of the most comprehensive and persuasive ever put before the Treasury."
There have been continued calls from the tourism and hospitality sectors in Northern Ireland to lower the VAT rate in line with the Republic of Ireland. The Campaign to Cut Tourism VAT has secured the support of 139 Westminster MPs and the backing of all of Northern Ireland’s Political Parties except Sinn Fein.