Calls to reduce VAT for the hospitality sector have again been ignored as a Government spokesperson dismissed the idea in a Parliamentary debate.
Lord Aberdare highlighted claims that the UK was at a disadvantage compared to other EU countries, which enjoy lower VAT on guest accommodation and tourist sites, as part of a House of Lords debate on the impact of music in the tourism sector.
But Liberal Democrat peer Baroness Northover, representing the Government, rejected the idea that lowering the tax would not result in the increase in tourism and hospitality revenue promised by campaigners.
The snub follows several setbacks to the campaign, most noticeably Chancellor George Osborne's on-going refusal to lower the taxes in any of his Budgets.
Several groups have spearheaded calls for a lower tax, including "Cut Tourism VAT" run by Graham Wason for the British Hospitality Association and the British Association of Leisure Parks, Piers and Attractions, and French lobbyist Jacques Borel's VAT Club. Borel, who is organising a "Tax Parity Day" which encourages pubs and restaurants to reduce prices by 7.5% on 25 September, claims to have helped convince countries including Belgium, the Czech Republic and France to slash rates.
The UK's tax currently stands at 20% compared with 10% in Italy, 9% in Ireland and 7% in France.
Supporters of the campaign argued that cutting VAT from the current 20% to 5% would create tens of thousands of UK sector jobs and raise over £2b for the Treasury.
Many UK associations lent their support to the move, including the British Beer & Pub Association, Accor UK, the Merlin Entertainments Group, InterContinental Hotels, The Tourism Alliance, Whitbread and more.
However, Baroness Northover was clear the tax would not be changing. "The Treasury could not see a causal link between VAT rates and tourism levels, so I am afraid that the Treasury is thus far not persuaded," she said.