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Tuesday, 28 May 2013

Tourism Minister misguided and incorrect on Tourism VAT

The below letter was letter in the Yorkshire Post on 25 May 2013 in response to comments by the Tourism Minister.

The points made by Minister for Tourism, Hugh Robertson MP, regarding tourism VAT require correction. (Yorkshire Post, 18 May)

The evidence in favour of a reduced rate of VAT for the tourism sector is clear and has been recognised by our international competitors. Out of the 27 EU member states the UK is amongst only four (alongside Denmark, Slovakia and Lithuania) in not taking advantage for visitor accommodation.

The Minister claims that after the French reduction of tourism VAT rates that “quite a lot” of the businesses did not reduce prices. In fact prices declined by 2.2% approximately in real terms and the measure helped keep costs down during a time when food prices were rising globally. In addition the reduction also increased wages and investment in the sector.

Finally, the Minister argues that exchange rates are a more important factor than VAT. This ignores the point UK holidaymakers planning a domestic holiday are unaffected by currency conversion.

The Government has the ability to reduce the rate of VAT on tourism immediately – a more sustainable strategy than the Minister investing his hope that the pound will continue to weaken.

One would have thought that the Minister might be alive to the fact that a growing number of the electorate are deeply troubled by many of the inequalities between the UK and many of its EU partners and a 20% VAT rate on tourism has the potential to become a bitter electoral issue.

Graham Wason
Chairman, Cut Tourism VAT

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