Parliament to debate hospitality and tourism VAT

06-Feb-2014 - Last updated on 26-Apr-2021 at 19:19 GMT

Parliament will debate tourism and hospitality VAT in Westminster Hall on 11 February

After years of industry campaigning, Parliament will next week hold a debate on VAT rates for tourism and hospitality.

The first ever House of Commons debate on tourism VAT will take place in Westminster Hall on Tuesday 11 February from 9:30am to 11:00am.

It will focus on whether the government should cut VAT for tourism and hospitality businesses to 5 per cent, down from the current high rate of 20 per cent.

MP support

The debate was scheduled by a group of MPs who took part in a round table organised by Cut Tourism VAT in London last month.

Cut Tourism VAT, which is supported by over 3,500 hospitality businesses and associations, is encouraging everyone in the industry to send a letter to their MPs ahead of the debate.

The campaign has published a template letter calling on MPs to support a reduction in VAT on tourism accommodation and visitor attractions as a first step.

Graham Wason, chairman of Cut Tourism VAT, said: “This is the first ever debate focused exclusively on tourism VAT in Parliament and is an important opportunity that industry must take advantage of.

“The Campaign is working with all of our supporters to encourage MPs to take part next Tuesday and to raise aware of the strong economic evidence behind the case for a reduction.”

British Hospitality Association chief executive Ufi Ibrahim said the forthcoming debate was proof that even the smallest grassroots campaign could be effective.

“Every letter, every conversation, every mention of the importance of hospitality and tourism, and the potential to drive additional wealth and jobs through a competitive VAT rate gets us one step closer to the prize,” she said.

Competitive disadvantage

Under EU laws, member states are permitted to reduce VAT rates for a limited number of services and industries, including tourism.

Other EU countries have taken advantage of this, with all but four member states introducing reduced VAT rates for visitor accommodation, and 13 member states introducing lower VAT rates for restaurants.

However, UK government has repeatedly ignored calls to reduce the VAT rate for tourism and hospitality, because it believes the cut would be too expensive.

Campaigners argue that cutting VAT for hospitality and tourism would actually increase revenue because it would improve the competitiveness of UK tourism in Europe, encouraging more foreign visitors and tempting Brits to holiday closer to home.

Treasury adviser Professor Adam Blake came to the same conclusion in an independent report published last year, concluding that cutting tourism VAT to 5 per cent would be “one of the most efficient, if not the most efficient, means of generating GDP gains at a low cost to the Exchequer.”

Brighton and Hove MP Caroline Lucas, one of three backbench MPs who pushed for the debate, said ministers could not continue to ignore the arguments put forward by the industry.

“The fact that the UK is one of the few European countries that doesn’t have a reduced rate of tax on tourism puts us at a major disadvantage,” she said, pointing out that a reduced rate would boost UK businesses and create jobs, as well as delivering revenue to the Treasury.

You can download a template letter to send to your MP here. For more information on the debate and the campaign, visit the BHA website.