Third parliamentary select committee calls for reduction in tourism VAT

Third parliamentary select committee calls for reduction in tourism VAT

A third major parliamentary select committee has voiced its backing for cutting UK tourism VAT.

The recommendation by the Northern Ireland Affairs Committee in Westminster is another step in moves to make the UK tourism industry on a level playing field with its European counterparts.

The Cut Tourism VAT Campaign already has the support of 171 MPs across all parties and has secured recommendations from the Culture, Media and Sport Committee and the Welsh Affairs Committee.

Butlins managing director and cut VAT campaign chairman, Dermot King, said: “There is now deafening support from across the UK and the political spectrum for the government to recognise the distinct needs of the hospitality and tourism sector.

“The UK is at a major competitive disadvantage to European competitors, ranking 140th out of 141 on world price competitiveness.

“A reduction in tourism VAT could be brought into effect immediately, as there is no need for legislation at the national or EU level.”

He added: “I’ve already called on the government to reduce tourism VAT during school holidays to test our conviction that cutting this tax would help businesses and the public and in the long term the Treasury.”

Eddie McKeever of McKeever Hotels Group, which operates both in Northern Ireland where UK tourism VAT at 20% applies, as well as Ireland where the rate is more than half at 9%, said: “As a family business that operates on both sides of the border I’ve been surprised at the difference it makes.

“The 11% VAT gap between Northern Ireland and the Republic of Ireland has benefitted my business and guests in the Republic.

“As a result, I’ve been able to secure more jobs than initially forecasted and have created further jobs in the local community.

“I hope the UK government will now understand the benefit and opportunities of reducing tourism VAT. “

The hospitality and tourism sector is the fourth largest industry in the UK, supporting 4.5 million jobs and contributing 10% of UK GDP.

Yet, on top of one of the highest VAT rates on tourism in Europe, the industry faces rapid increases in its cost base and the prospect of severe labour shortages as a result of Brexit.

A recent review by Dr Andrew Sentance CBE, a former member of the Bank of England Monetary Policy Committee, concluded that reducing tourism VAT would be the single most effective taxation reform for stimulating growth.

He also found that the campaign’s economic argument was one of the most comprehensive cases ever put before HM Treasury.

The Cut Tourism VAT campaign is supported by a coalition including
Butlins, Merlin Entertainments, the British Hospitality Association, the British Association of Leisure Parks, Piers & Attractions, InterContinental Hotels Group, Travelodge, Premier Inn, The Caravan Clubs and Farmstay UK.

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