Government should consider a cut in VAT for tourism business, report suggests

26 March 2015 by
Government should consider a cut in VAT for tourism business, report suggests

The Government has been urged to consider cutting VAT on "a variety of tourism services" in a new report published by the House of Commons Culture, Media and Sport Committee.

Despite contributing "billions of pound" and sustaining "millions of jobs" to the country's coffers, the Government is criticised in the report for failing to recognise the enormous value of the tourism industry to the economic well-being of the UK.

As a result, thousands of small businesses which characterise tourism are suffering from a surfeit of regulations and a failure by government to inform them of the opportunities and funding that exist to train young people for work.

The Government is also criticised for abolishing the Regional Development Agencies without putting in place adequate arrangements for promoting tourism.

Amongst a list of 27 recommendations that would help to raise the profile and importance of the industry, the committee suggests that the Government should undertake "a thorough analysis of the scope for cutting VAT on a variety of tourism services", with a view to lowering the tax should evidence show that by doing so will benefit both tourism and the wider economy.

Other recommendations by the committee include:

• Make the cost of UK visas competitive by moving towards more multiple entry long term visas for bona fide tourists.

• Provision of adequate funding for VisitBritain to enable it to compete for more international visitors and to reduce the disparity in financial support given to VisitScotland and VisitWales.

• Consideration of a reduction in Air Passenger Duty.

• Support the recommendations outlined by the Tourism Regulation Taskforce, headed by former tourism minister John Penrose, which would help to remove unnecessary red tape in the industry.

• Implementation of training opportunities and apprenticeships which recognise some of the unique features of tourism businesses such as seasonality, scale and uncertainty in customer demand.

Graham Wason, chairman of the Cut Tourism VAT campaign welcomed the report, which he urged the Government to take note of.

"The committee has recognised the major contribution of the tourism industry to jobs and the wider economy in every constituency of the country. The report highlights that the rate of VAT on tourism in the UK, at double the EU average, is making Britain uncompetitive," he said.

British Hospitality Association chief executive Ufi Ibrahim added: "The hard work of the members of the BHA and our Cut Tourism VAT campaign has resulted in the Culture, Media and Sport Select Committee recommending a cut in Tourism VAT.

"This is a major breakthrough but there is much still to be done and we are urging people across the industry to get in touch with Parliamentary candidates to ask for commitments to cut tourism VAT.

"The Select Committee has also made more important recommendations based upon clear feedback from the BHA to ensure Tourism is no longer omitted from the UK Government's economic growth policy. This report shows that presenting a united voice for the tourism and hospitality industry is working and the Government has been listening."

Over 60 MPs support Cut Tourism VAT calls >>

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