The British Hospitality Association (BHA) and a host of hospitality industry heavyweights have written an open letter to the Government, calling for a reduction in VAT to 5%, published in the Sun on Sunday today.
A total of 12 top industry figures - including Andy Harrison, chief executive of Whitbread, Guy Parsons, chief executive of Travelodge, and Simon Vincent, area president Europe of Hilton worldwide - have signed the letter.
Addressed to Chancellor George Osborne ahead of the Budget later this month, it points out that the hospitality industry supports 2.5 million jobs and contributes over £34b annually to the UK Exchequer.
It goes on to claim that a reduction in VAT on accommodation and attractions could generate 79,0000 extra jobs, with a large proportion of those going to younger workers. It would also contribute an additional £2.6b to the Exchequer over the next decade.
The move marks a major step forward in the BHA's campaign for a VAT cut, which began in earnest last year and has involved top-level discussions with Treasury officials, led by Graham Wason, chairman of Tourism & VAT: Making Britain Competitive.
The letter in full, as it appeared in the Sun on Sunday:
Cut the visitor tax to make Britain more competitive, create jobs and boost the economy
Tourism is the UK's third-largest export industry, bringing in £17.7 billion each year in foreign exchange earnings.
As an industry, it supports over 2.5 million jobs and contributes over £34 billion annually to the UK Exchequer.
Yet in a truly international market, we find ourselves competing against our European neighbours with one arm tied behind our back.
While other countries use EU rules to support their tourism sector, the UK increased VAT last year to 20 per cent. We now rank 135th out of 139 countries on price competitiveness.
The UK, Denmark, Lithuania and Slovakia, are the only countries in the EU to charge the full VAT rate on visitor accommodation at 20 per cent or above. Tourists in France and Germany pay only seven per cent VAT on their stay. Those in Italy and Spain pay ten and eight per cent respectively.
The UK is in the minority of EU countries that charge the full VAT rate on visitor attractions. Visitors in France and Spain pay seven and eight per cent respectively.
On the eve of Tourism Week, as you consider the final amends to the Budget Statement we ask you to cut VAT for the UK's visitor accommodation and attraction sector to five per cent.
This year we have a once-in-a-generation opportunity to steal a march over our rivals with London 2012 and the celebrations for the Queen's Diamond Jubilee.
Britain will be at the centre of global attention in 2012. There is no better signal that we are open for business than by cutting this tax on our overseas and domestic visitors.
This will ensure 2012 delivers not just a temporary increase in visitor numbers, but a lasting economic legacy for the country in terms of jobs and revenue.
Research has shown that a reduction in VAT on visitor accommodation and attractions could generate an extra 79,000 jobs - a large proportion of which will go to younger workers at a time when one in five 16- to 24-year-olds is out of work.
It would also contribute an additional £2.6 billion to the Exchequer over the next decade.
On behalf of the UK economy, we urge you to cut VAT for the visitor accommodation and attraction sector so we can help drive employment and prosperity here in the UK at a time when it is most needed.
● Alan Parker, president, British Hospitality Association
● Ufi Ibrahim, chief executive, British Hospitality Association
● Graham Wason, chairman, Tourism & VAT: Making Britain Competitive
● Nick Varney, chief executive, Merlin Entertainments
● John Cook, CEO, Bourne Leisure Group
● Rhys Roberts, chairman, Best Western GB
● Andy Harrison, chief executive, Whitbread
● Simon Vincent, area president, Europe, Hilton Worldwide
● Thomas Dubaere, managing director, Accor UK-IRL
● Amanda Thompson, MD, Blackpool Pleasure Beach
● Jeremy Reed, chief executive, BALPPA
● Guy Parsons, chief executive, Travelodge
Show your support for a cut in VAT for the hospitality sector by signing up to Caterer and Hotelkeeper's Slash VAT petition: www.thecaterer.com/slashvat.
By Neil Gerrard
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