Review demanded of tax burden on travel and tourism

Review demanded of tax burden on travel and tourism

Reductions in VAT and Air Passenger Duty would offer better value for tourists, an influential committee of MPs says in a report published today (Thursday).

Government is not giving sufficient recognition to the central role of tourism in the economic activity and life of the country, according to the Culture, Media and Sport Committee.

Most importantly, it says tourism needs a stronger voice in government.

It recommends that the government analyses the impact of APD on the UK’s tourism industry and takes the findings into account when reviewing this in the future. Developments in Scotland and Wales should also be monitored for their impact on England.

The costs and benefits of reducing VAT on all tourism services, together and in isolation, should be assessed so that Treasury decision-making is fully and transparently informed, the committee adds.

It calls for a broad, public review and consultation on tourism taxes, including VAT and APD.

“Where the evidence leads, and practicalities allow, these taxes should be lowered to benefit both tourism and the wider economy,” the committee recommends.

Whichever government is in office after the general election is urged to to take full account of the needs of the tourism industry when reviewing business rates.

Abta welcomed many of the recommendations, which it says reflect points made in written submission and appearance before the committee.

The report describes the tourism sector as being a “massive conglomeration of diverse businesses and organisations” yet it contributes billions of pounds to the British economy and sustains millions of jobs.

“Yet too often, government fails to factor tourism into its wider decision-making,” the report adds.

Reductions in VAT and APD would make the UK offer even better value for money to holidaymakers, business travellers and students and the government is urged to give “full consideration” to this.

Further improvements to visa processing and cost reductions are also needed.

Regional airports could be better promoted to encourage visitors to the UK in general and the regions in particular long before it becomes feasible to increase airport capacity in south-east England.

Support for tourism in England was damaged by the abolition of the Regional Development Agencies without putting in place adequate arrangements for tourism promotion, according to the committee.

“With sufficient resources, VisitEngland is well placed to move more decisively into the organisational vacuum left by the abolition of the Regional Development Agencies and the Regional Tourist Boards, and could better co-ordinate the disparate efforts of some 200 local Destination Management Organisations,” the report says.

“VisitBritain has shown marked success in attracting overseas visitors, but should remain alert to the need to leverage even more the undoubted lure of London to bring more visitors to other parts of the United Kingdom.

“The GREAT Campaign continues to demonstrate its originality and vitality – funding for this campaign needs to be confirmed for a longer period.”

Committee chairman John Whittingdale MP said: “The tourism sector is a major part of the UK’s economy and creates millions of jobs, involving a lot of small businesses and unique features such as seasonality and uncertainty in customer demand.

“Given the size of its contribution, there is not enough recognition of or support for the sector or adaptations to its unique features.

“Tourism needs a stronger voice, and government should look at how the burden of regulation and taxation on the tourism industry could be lightened to boost its contribution even further.”

Abta chief executive Mark Tanzer said: “Today’s report published by the Culture, Media, and Sport Committee sets out some of the challenges ahead for the next government in unlocking tourism’s full potential. We welcome many of the Committee’s considered recommendations.

“The committee makes some important recommendations on Air Passenger Duty, visa rules, and business rates.

“Abta is particularly pleased to see the committee’s recognition of the importance of the UK’s vibrant mix of inbound, outbound and domestic tourism businesses; Abta has worked hard over the life of this Parliament to raise the profile of outbound tourism as an economic driver, and it is positive to see this influential committee recognise the value of outbound tourism, alongside inbound and domestic.”


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