The Liberal Democrats have become the first main political party to call for a cut in the rate of VAT on domestic tourism from 20% to 5%.
The party adopted the new policy to reduce VAT on visitor accommodation and attractions at its annual conference in Bournemouth on 20 September.
If introduced nationally, the VAT reduction is expected to create 123,000 jobs and £4b of extra revenue over 10 years.
Lib Dem leader Tim Farron (pictured) said: "I would like the government to reduce VAT for tourist attractions and accommodation to boost UK exports, create more jobs and support our local economy."
The issue was proposed by the Welsh Liberal Democrats at the autumn conference and was passed by members.
Eluned Parrott, the Welsh Liberal Democrat shadow economy minister, said: "Local hotels, B&Bs and our holiday hotspots are the backbone of our economy and they need more help and support. "Tourism accounts for 10% of our economy and employs three million people, with nearly half of those jobs taken up by young people.
"But we have some of the higher VAT laws in Europe, with the vast majority of EU countries having already lowered the tax on the industry.
"If we want to boost tourism, create more jobs and continue to showcase the best of Britain, it's time we gave the sector a helping hand."
The Cut Tourism VAT campaign has the support of over 1,000 hospitality and tourism operators and more than 125 MPs from all political parties.
Dermot King, chairman of the Cut Tourism Vat campaign and MD of Butlins, said: "The evidence behind the benefits of a reduction of tourism VAT to businesses, the national economy and British families has never been clearer and I am pleased to see the Liberal Democrats taking up the cause. We now need to win the hearts and minds of the British public who don't realise that they are being taxed harder than almost anyone else in Europe for simply going on holiday in their own country.
"We hope that the Chancellor will consider making this reduction, as part of the Comprehensive Spending Review now underway."
Ufi Ibrahim, chief executive of the British Hospitality Association, the organisation behind the campaign, said: "This decision by the Liberal Democrats reflects the growing political support for our campaign. Tourism is the UK's only major export subject to 20% VAT - double the rate of the EU average. Growing numbers of MPs are joining our call to Treasury for a cut in VAT on tourism exports."
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