Cut Tourism VAT

Cut tourism VAT, boost british jobs

News

Wednesday, 20 March 2013

Welcome to the Cut Tourism VAT campaign

The Cut Tourism VAT Campaign is asking the UK Government to reduce VAT on tourism from the standard rate of 20% to the UK’s current reduced rate of 5%.

This is because almost every other country in the EU applies a reduced rate of VAT to at least some, if not all, parts of their tourism sector. This puts the UK at a competitive disadvantage and is partly why the UK ranks 138th out of 140 countries on travel and tourism price competitiveness (according to the World Economic Forum).

Tourism and hospitality combined account for over 3 million jobs, more than 10% of the UK’s workforce. Our sector can do so much more to help reduce the UK’s unacceptably high unemployment rate. One of the easiest ways in which we could do this would be with a reduced rate of VAT in line with our European competitors.

Extensive research by the Campaign shows that this would create 80,000 jobs, would add £4 billion of much-needed growth to the UK economy, and would increase Treasury income by £2.6 billion over 10 years. What is the government waiting for?

The Campaign has become very active and vocal over the past two years but has its origins some 20 years ago when in 1993 the then British Tourist Authority pulled together a VAT Working Group. Deloitte was commissioned to undertake a comprehensive study on what would happen if the UK Government did reduce VAT on tourism. I was the Deloitte partner responsible for leading this work. Our report, first published in 1995, showed that this single measure would set off a virtuous cycle of growth which would wipe out Britain’s negative tourism balance of payments, at that time standing at a loss of £4 billion. Without the VAT cut the tourism deficit has since risen to nearly £20 billion.

Since that first study I have been involved in a further seven comprehensive reports of the impact of reduced VAT on UK tourism, sometimes working with Deloitte and sometimes independently or with others, and for a variety of clients including BHA, BALPPA, Bourne Leisure Group, Merlin Entertainments Group, and even for M. Jacques Borel.

All of these reports have shown similar positive outcomes, not only for tourism but for the whole of the UK economy.

I have a vested interest in the outcome of this Campaign as I own Cossington Park, a five-star Gold Award self-catering business in Somerset. Changes by the UK Government to the Furnished Holiday Letting rules a couple of years ago threaten the viability of my business.  Reduced VAT could help secure its survival and contribution to the rural economy.

Graham Wason is Chair of the Campaign for Reduced Tourism VAT

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