New Campaign to Reduce VAT on Tourism

A major new campaign to reduce VAT for tourism companies to 5% has been launched. The campaign for this long-standing issue continues to gain momentum and now has backing from MPs in all political parties.

The economic case behind the proposal forecasts the creation of more than 120,000 new jobs is George Osborne agrees to reduce the VAT rate for tourism.

“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,” explained Accor UK & Ireland MD, Thomas Dubaere.

“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.”

National Press Coverage

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.

“This campaign is about more than just tourism – it’s about the people, communities and jobs driven by it right across the country,” said Cut Tourism VAT chairman, Graham Wason. “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.”

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 BALPA, to small B&Bs, family run attractions, zoos and major international brands.

Economic Case for Cutting VAT

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.

“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,” explained British Hospitality Association chief executive, Ufi Ibrahim.

“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.”

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 £17 billion 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.

International Parity

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.

InterContinental Hotels Group commented that, “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.”

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.

The campaign continues.

 

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