A plea has been made to European Union finance ministers to avoid unproductive “knee-jerk” tourism tax hikes at a time of austerity.
World Travel & Tourism Council chairman Michael Frenzel – chairman of Tui AG – and WTTC president and chief executive David Scowsill urged the 27 ministers to recognise the important role of the industry in stimulating economic growth and jobs.
The joint letter highlights the industry’s role as a key generator of employment, directly responsible for 10 million jobs across Europe, substantially more than the automotive manufacturing (3.2 million), mining (3.6 million) and financial services sectors (8.5 million).
It points to recent WTTC research showing that Air Passenger Duty costs the UK economy £4.2 billion in GDP and 91,000 jobs through lost business.
The letter from the WTTC chiefs says: “Given the labour intensity of travel and tourism, and as the above data shows, travel and tourism is one of the few economic sectors which can generate economic growth with jobs.
“Travel and tourism is seen as a ‘cash cow’, an ‘easy source’ for generating quick money through new or expanded taxation. However, the evidence suggests that taxing tourism does not reap benefits.”
The WTTC claims that simple measures can be taken to stimulate the sector, increase visitor revenue and therefore jobs.
One example is a study released last month by the WTTC and the World Tourism Organisation showing how improvements in visa policies in G20 countries could increase travel and tourism employment by an additional five million jobs over three years and generate an additional $206 billion in tourism exports.
The WTTC also points out that Holland abolished its air departure tax after one year following significant decreases in passenger volume. The €300 million earned in tax revenues was negated by the cost of €1.2 billion to the economy as passengers used alternative airports in neighbouring countries
The Irish air travel tax of €10 per person was reduced to €3 per person following a two million drop in travellers to Ireland over three years
The reduction of German VAT from 19% to 7% for accommodation services at the beginning of 2010 has seen the number of available jobs in the hotel industry increase on average by 20%.
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