Refreshed calls to cut VAT now tourism is 'important export industry'

07-Jan-2015 - Last updated on 07-Aug-2024 at 14:30 GMT

Cut Tourism VAT is putting renewed pressure on the Government to lower VAT to 5 per cent for the tourism industry

Cut Tourism VAT, the campaign set up to put pressure on the Government to lower the VAT rate for tourism and hospitality businesses in the UK to 5 per cent, is calling for politicians to think again about changing the rate now tourism has been dubbed an important export industry.

Tourism is now the UK’s sixth largest export-earner and is expected to bring in £22bn from overseas visitors in the forthcoming year, yet Graham Wason, chairman of the Cut Tourism VAT Campaign, said it is the only export sector still paying 20 per cent VAT.

The campaign also fears the UK will fail to compete with its European neighbours as it is one of only three of the 28 EU member states that does not offer a reduced VAT rate on visitor accommodation and visitor attractions.

“The Government has a huge opportunity to boost British exports by lowering VAT. Other European countries, like Ireland, know that helping their tourism industries compete is an investment that will pay major dividends in terms of jobs and extra tax revenue. It’s time for Westminster to recognise the benefits of a lower rate of Tourism VAT," said Wason.

Triple whammy

Cut Tourism VAT said the industry faced a 'triple whammy' of pressures in 2015 from:

The Euro's weakness: The Euro has dropped to 78p from 84p last March, which is expected to make holidays on the continent cheaper by 7 per cent. Cut Tourism VAT says this "will almost certainly lead to a massive rush to book holidays in Europe and further afield by thousands of British families."
Air Passenger Duty (APD) rates for children travelling abroad is set to be abolished starting in May 2015. Cut Tourism VAT says: "while reducing barriers on tourism is positive, this will, unfortunately, harm Britain’s competiveness. It will undoubtedly encourage more families to take short stays and summer holidays on the continent, without an equivalent benefit for those staying in the UK."
VAT rates: For accommodation and attractions these continue to be three times higher than those in Belgium, Greece, Netherlands and Portugal, it says and twice that of France and Germany.

Dermot King, managing director of Butlins, whose business is one of 43,000 supporting the campaign, said: “Unfortunately, the Government’s new measures on APD have created an anomaly whereby families who go abroad get a new tax benefit but families who stay at home do not. Tourism, particularly domestic tourism, can help drive growth in the UK economy but only if it remains competitive.

"We urge the Government to reduce VAT on UK holidays to a fair level, so that we can offset the impact of a falling Euro and reduced APD charges.”

The Cut Tourism VAT campaign also has the support of 35 major tourism and hotel groups and more than 100 MPs.