Key figures demand VAT cut on UK tourism services

Key figures in the UK tourism industry have again called on the Government to cut VAT on tourism.

The British Hospitality Association has long argued for the Government to take action to make the UK more competitive – including: deregulation, the cutting of tourism VAT and improved Visa policies. And, after the Brexit vote last June, now is the time for the Government to act, says the boss of Butlin’s.

Dermot King told the i newspaper that VAT across the tourism industry should be reduced from 20 per cent 5 per cent.

“I’m not sure the British public realise that they are being taxed harder than almost anyone else in Europe for simply going on holiday in their own country. We’re three-times more expensive than Germany and twice as expensive as France when it comes to VAT”, he said.

Ruud Jansen Venneboer, owner of self-catering accommodation Mazzard Farm in Devon, told the i that many small businesses purposely stay below the £82,000 annual revenue threshold at which VAT kicks in.

“Businesses such as my own are constantly being threatened by uncompetitive rates of VAT and recently announced rising business rates. If the Government reduced VAT we would definitely hire new staff but at the moment we just can’t afford to.”

Simon Watkins, city editor of the Mail on Sunday agreed and said Britain didn’t have to wait until it left the EU to make the change.

“In fact, the EU itself already allows countries to have a lower VAT rate for tourism, recognising it as a key economic activity,” he said.

“The vast majority of EU countries already take advantage of this flexibility to charge lower sales taxes on tourism than the UK.

“This means that a tourist pays two to three times more tax on a UK hotel room than in other destinations in Europe.

“It is infuriating that so much debate last year was about how we could throw off EU controls to boost our industry, when we haven’t even been taking advantage of what we could do even within the EU rules.”

Short term loss – long term gain

Mr Watkins said that although there might be a short term loss to the Exchequer of cutting VAT on tourism, there would be an overall boost to the economy.

Deloitte has estimated it could add a net £2.6billion to the tax take over ten years and add tens of thousands of jobs, he said.

“There is also a defensive reason to assist the leisure sector. It has done well in recent years and study after study shows spending in restaurants and on other leisure treats has increased, while shopping for clothes and other goods has been under pressure,” added Mr Watkins.

“The tendency for British residents to keep spending on these leisure activities is now under threat as rising inflation, from petrol prices and the higher price of imported goods, is set to erode our disposable income.

Cutting VAT on tourism will not solve the challenges we face in 2017 as our future trade relationship with Europe is hammered out.

“But unlike many other industries where other nations can set tariffs and other barriers, tourism is a form of foreign trade that is almost entirely within our own control.

“Now is the time to give tourism every help we can.”

A Government spokesman said: “Tourism has been one of the highest performing sectors in the UK economy in recent years. While we keep all taxes under review, we do not have any current plans to introduce a VAT cut for the tourism sector”.

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