SNP u-turn on aviation tax strengthens the case for a cut in tourism VAT
Following yesterday’s surprise U-turn by the SNP on cutting airport departure tax, the Cut Tourism VAT campaign has reissued its call for VAT to be cut to 5% from its current rate of 20% to protect the future of Scottish tourism.
The U-turn by the SNP adds further fiscal obstacles for the Scottish tourism industry that is already burdened with a punitively high tax regime in comparison with European competitor destinations. Recent research shows that halving the airport departure tax would have created almost 4,000 jobs and added an extra £1bn to the Scottish economy.
The Chief Executive of Edinburgh Airport accused the Scottish Government of ‘sheer hypocrisy’ for the abandonment of their manifesto pledge while the Conservatives said the government had broken promises to the tourism industry and had “succumbed once again to the environmental extremists in its own nationalist movement”.
Jack Irvine, Campaign Director of the Cut Tourism VAT campaign said: “The reversal of a manifesto pledge is further evidence of an administration that takes for granted the enormous contribution that tourism makes to the Scottish economy. This decision to not cut aviation tax follows quickly after the disastrous decision to press ahead with plans for a tourist tax in Edinburgh. In a time of economic uncertainty, the Scottish government should be rolling out the red carpet to tourists, rather than dreaming up ways to further erode Scotland’s tourism price competitiveness.”
“We have always been encouraged that more than 150 MPs from all mainstream political parties support the CTV campaign, with 42 out of 59 Scottish MPs backing the campaign, including 29 from the SNP. There has never been a better time for the Scottish government to pressure Westminster for a nationwide VAT cut on tourism activities.”
Spending by tourists in Scotland generates £12 billion of economic activity for the wider Scottish supply chain and contributes £6 billion to GDP, representing 5% of total Scottish GDP. Additionally, the tourism industry in Scotland supports more than 217,000 jobs and accounts for 8.5% of total employment.
Reducing the rate of VAT from 20% to 5% on accommodation and visitor attractions has the potential to create 13,000 jobs and produce a net GDP gain to the Scottish economy of £489m over 10 years.
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