Reducing the rate of VAT for tourism services stimulates investment, creates employment and boosts growth
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Cut Tourism VAT is campaigning for the rate of Tourism VAT to be brought into line with competitor destinations throughout the rest of Europe.
The United Kingdom is one of only two countries not to apply a reduced rate of VAT to visitor accommodation, and most countries also do so to visitor attractions and meals out.
This means that British families or international visitors choosing a British holiday would pay almost three times as much VAT compared to a German break, and twice as much as one in Italy, France and Spain.
As such British tourism businesses are continuing to lose further ground to our European rivals in attracting domestic and international holidaymakers. The results of this can be seen in struggling popular tourist destinations, especially in coastal areas. Reducing tourism VAT would help lower prices, but also allow businesses to increase investment in these areas.
In addition this measure would increase revenue to HM Treasury. Independent research carried out by a Treasury adviser using the Government’s own economic model has concluded that lowering the rate of tourism VAT to 5% is “one of the most efficient, if not the most efficient, means of generating GDP gains at low cost to the Exchequer that we have seen with the CGE model”. Additional research by Deloitte/Tourism Respect found that such a reduction would contribute an extra £4.6 billion to HM Treasury over ten years and create 121,000 jobs.
The Cut Tourism VAT Campaign says that the Chancellor’s decision to extend the reduction of VAT for hospitality and tourism businesses to 5% by a further six months will help the industry start to get back on its feet and begin trading again but increasing it back up in October to 12.5% does not solve the…..Read more
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