Cut Tourism VAT

Cut tourism VAT, boost british jobs

News

Saturday, 20 April 2013

Imagine what the tourism industry could do?

Imagine what the tourism industry could do without one VAT-arm tied behind its back

The below viewpoint was published alongside the Caterer and Hotelkeeper editorial on the 25 April 2013. To access the full story please click here.

With no sign of any significant growth in GDP, unemployment continues above 2.5 million and nearly a million young people are out of work.

The two drivers of the economy over the past 15 years – public spending and cheap private credit – are no longer there, so where can the Government find growth?

The solution would be an industry that is a proven exporter, creator of jobs (particularly for young people) and one that did not suck growth from other sectors of the UK economy.

Tourism is the third-highest exporter for the UK. It employs almost 10% of the workforce and, if our business reflects the rest of the industry, more than 60% of new jobs created go to people under 25. Furthermore, as the public sector faces job reductions, many of those jobs can be easily transferred into the tourist industry.

That is a why I welcome the news that Caterer is placing the full weight of its Slash VAT campaign behind the Cut Tourism VAT campaign.

Tourism is a highly competitive international market. Sometimes we can get carried away in thinking that the UK has a unique product to offer (and it does), but so does French, Spanish, Italian and German tourism.

The UK is relatively too expensive. The World Economic Forum rated us 138th out of 140 countries in their Travel and Tourism Competitive Index. The main reason for that is high UK taxes, notably APD, visas and VAT.

Imagine what the tourism industry could do without one VAT-arm tied behind its back

The average UK family pays about twice as much VAT as the next most expensive European competitor country and nearly three times as much as the average European competitor. So whereas the UK family spends 20p for every pound they spend on a UK holiday, a French or German family spends only 7p.

Tourism is price sensitive. I know because Bourne Leisure provides about one in every six UK domestic overnight stays.
Reducing VAT on tourism to 5% would cost the Government an estimated £1.2b in lost revenue, but that would be more than offset by gains from broadening the tax base, higher employment and therefore lower social security payments and higher corporation tax take.

There are some great entrepreneurs in the UK tourist industry; the Government’s job must be to create an environment whereby they can compete and create jobs. These entrepreneurs have together created one in three private sector jobs in the past year. Imagine what we could do without one VAT-arm tied behind our backs?

Dermot King is Director of Bourne Leisure, one of the leading organisations supporting Cut Tourism VAT

 

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