Overwhelming support for VAT reduction to 5% for hospitality in BHA survey

23 April 2012
Overwhelming support for VAT reduction to 5% for hospitality in BHA survey

There is overwhelming support for a reduction in VAT from 20% to 5% on hotel accommodation, attractions and meals away from home among hospitality professionals.

That's the key finding of a survey by the British Hospitality Association (BHA) of more than 200 of its members.

The survey marks the launch of new VAT pages on the BHA website, as it steps up its campaign for a VAT reduction for the sector.

The web pages will give updated developments on the campaign as well as a comprehensive series of questions and answers which explain the background to the campaign and its aims and objectives. A Facebook campaign is also being launched.

The BHA's survey showed that its members believed the UK would gain a poor reputation for value for money if the Government continued to keep VAT for the UK hospitality and attractions industry at 20% and that this represented a severe barrier to growing their businesses.

Nearly 98% of those surveyed claimed that the current VAT rate hindered the competitiveness of the UK hospitality and attractions industry; while 85% forecast that a reduction in VAT to 5% would create new jobs and increase staff numbers; 90% also said they saw business development opportunities following a VAT reduction.

Meanwhile, three-quarters (74%) believed a reduction to 5% would lead to more domestic visitors while over half (55%) said it would lead to more overseas visitors. Three-quarters (76%) said that a reduction in VAT would boost turnover.

And a VAT reduction would spell immediate savings for customers, with over 95% of businesses surveyed indicating that they would pass on all or some of the cut in VAT, if achieved, while 82% would invest more in their product/facilities, 67% would employ more people, 57% would invest more in training, and just under half (48%) would increase staff wages.

BHA chief executive Ufi Ibrahim said that the research emphasised the benefits that would be brought about by a reduction in VAT for the hospitality industry.

"Experience in other countries shows that major changes in VAT rates are passed through to customers in their entirety," she said. "It's clear that our members plan to plough the saving achieved back into their business through lower prices, greater investment, more training and higher wages.

"These findings emphasise our belief that a reduction in VAT will boost customer demand. This will lead to the creation of more and more jobs - our research indicates that 78,000 jobs would be created following a reduction of VAT to 5%. Of course, this will lead to greater revenues to the Treasury through higher tax returns.

"Reducing the VAT rate will also improve the UK's international competitiveness. This country is only one of four out of the 27 EU member states that does not impose a lower rate of VAT on hospitality services. This makes the UK uncompetitive with the rest of Europe. We are effectively fighting the competition with one hand tied behind our back.

"We will continue to press home these arguments to Government."

The BHA's VAT campaign >>

Slash VAT, Boost Business >>

By Neil Gerrard

E-mail your comments to Neil Gerrard here.

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