Failure to reduce tourism VAT in yesterday's Budget announcement is a missed opportunity for the UK economy, an industry pressure group has said.
The Campaign for Reduced Tourism VAT, which is supported by more than 500 hospitality associations and businesses, is calling for a level playing field with the UK's tourism competitors in the European Union which apply VAT at reduced rates.
Accommodation is taxed just 7% in Germany and France compared to 20% in Britain.
Graham Wason, chair of the Campaign, said: "We are disappointed at the Government's failure to reduce the rate of VAT for the tourism sector, as almost every other country in Europe has done.
"The Government has accepted the argument that a lower rate of corporation tax makes the United Kingdom more competitive internationally. However, the Treasury's own economic model demonstrates that reducing VAT on tourism is a better way to generate growth for the economy than reducing corporation tax.
"We're missing out on tourists from growing markets like China and Russia because of the high VAT rate as well as our unfriendly visa regime. Cutting the VAT rate for tourism to 5% will allow us to compete effectively with our international rivals, boost growth and deliver the Olympic legacy.
"The government is squandering its golden opportunity to create the right business environment for the tourism sector and the whole economy."
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