Government slaps £2.5m VAT on tourism rescue package

The Government has said there is "no question" of writing off the £2.5m VAT bill that has been slapped on its financial rescue package for the tourist industry. It has emerged that £2.5m of the £14.2m earmarked by the Department of Culture, Media and Sport (DCMS) to help boost the ailing tourist industry in the wake of the foot-and-mouth crisis is to be clawed back by the Treasury in the form of VAT. But a spokeswoman for the DCMS said today that, like all Government agencies, it was subject to tax and blamed the British Tourist Authority for not taking this into account when it presented its calculations to the Government of what was needed. "There is no question of writing off the VAT bill. That would be totally unfair to any other business that pays VAT," she added. But she held out a glimmer of hope by saying the department would "take on board" the criticisms that had been made. The Conservatives have called on the Government to make up the difference. Peter Ainsworth, shadow culture secretary, said: "The Culture department, whether through genuine incompetence or an attempt at spin, has let down and misled the tourist industry. "The Government should clarify their position immediately and commit to making good any shortfall from the amount proposed." Culture Secretary Tessa Jowell wrote at the weekend that the industry was "delivering a recovery from foot-and-mouth that is surprising even the optimists". Her comments followed official statistics published on Friday that showed in the three months to May the number of overseas visitors to Britain fell by 4% to 6.1 million compared with the previous three months. The amount they spent slipped by 7%, to £6.5b. The number of overseas tourists coming to this country during May was 9% lower than in May last year, the Office for National Statistics added. The BTA was unavailable for comment. by Nic Paton