Big Day in Parliament for Tourism and VAT
It was a big day in Parliament on Tuesday, 6th January for Cut Tourism VAT in a Westminster Hall Debate and Select Committee inquiry on tourism.
In Westminster Hall, Minister for Coastal Communities, Penny Mordaunt MP heard the need for coastal redevelopment and economic rejuvenation. Ian Liddell-Grainger MP highlighted the importance of Butlins in redeveloping his constituency of Bridgewater and West Somerset and called on the Government to provide such businesses with full support. Members Margaret Ritchie, Adrian Sanders and Sir Bob Russell also urged the government to approach a possible VAT reduction positively, seeing this as an opportunity for the entire country that would also help the diversification of local coastal economies.
On the same day, the Culture, Media and Sport Select Committee discussed the state of the UK tourism industry. One witness was Professor Adam Blake, an expert, who has provided core research demonstrating the case for a cut in tourism VAT. Tracey Crouch MP joked that her “inner VAT geek” has come out as it was an issue she was very interested in and led on questions to Professor Blake. He responded that his research demonstrated the strength of a tourism VAT cut compared to other measures such as lowering corporation tax or the general rate of VAT.
In conclusion, Professor Blake said that reducing tourism VAT was a very efficient tax reduction for two reasons. Firstly, that VAT on tourism was not an efficient way of creating revenue as tourism was an elastic product meaning demand would go down as price went up. Secondly, he said that tourism VAT was a tax on a domestic good while the foreign good was being left untaxed. As such, this made the VAT highly inefficient as consumers will buy the foreign good over the domestic one.
You can watch the full select committee panel here at this link.
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