Reducing the rate of VAT for tourism services stimulates investment, creates employment and boosts growth
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Cut Tourism VAT is campaigning for the rate of Tourism VAT to be brought into line with competitor destinations within the European Union.
There are a limited number of areas where EU rules allow governments to implement a reduced rate of VAT. In the case of tourism the United Kingdom is one of only four countries not to take advantage of a reduced rate.
This means that British families or international visitors choosing a British holiday would pay almost three times as much VAT compared to a German break, and twice as much as one in Italy, France and Spain.
As such British tourism businesses are continuing to lose further ground to our European rivals in attracting domestic and international holidaymakers. The results of this can be seen in struggling popular tourist destinations, especially in coastal areas. Reducing tourism VAT would help lower prices, but also allow businesses to increase investment in these areas.
In addition this measure would increase revenue to HM Treasury. Independent research carried out by a Treasury adviser using the Government’s own economic model has concluded that lowering the rate of tourism VAT to 5% is “one of the most efficient, if not the most efficient, means of generating GDP gains at low cost to the Exchequer that we have seen with the CGE model”. Additional research by Deloitte/Tourism Respect found that such a reduction would contribute an extra £4.6 billion to HM Treasury over ten years and create 121,000 jobs.
The Cut Tourism VAT Campaign heartily welcomes the Chancellor’s announcement that the reduction in VAT to 5% on visitor accommodation, hospitality and attractions is being extended to the end of the financial year. The long-term benefits of reduced VAT on tourism and hospitality services has long been proven, as evidenced not least by the fact…..Read more
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