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Scottish MPs urge review of tourism VAT in letter to chancellor

25 May 2016 by

A total of 44 Scottish MPs, all members of the Scottish National Party (SNP), have written a joint letter to chancellor George Osborne, urging the Treasury to study the benefits of reducing VAT on tourism anew.

The letter comes as the Cut Tourism VAT Campaign, led by the British Hospitality Association (BHA), Bourne Leisure Group, Merlin Entertainments Group, and the British Association of Leisure Parks, Piers and Attractions (BALPPA), co-ordinates an effort to try and reduce VAT paid on hotel accommodation from its current level of 20%, which is higher than many other European countries.

The SNP MPs argued in their letter that tourism in Scotland is at a major competitive disadvantage compared to other EU countries, because VAT in the UK is applied at the standard rate of 20%, whereas nearly all other EU member states have implemented a reduced rate on visitor accommodation and, in many cases, on tourist attractions too.

The letter, the full text of which is not yet available, called upon the Government to "work with the [Hospitality and Tourism] industry to determine how best to address this lack of competitiveness as we firmly believe that an open review of the evidence will support the economy of Scotland and the whole of the UK".

Over the past five years, the Campaign pointed out, the hospitality and tourism industry has created one in five new jobs in Scotland, where it accounts for 7% of total employment. However, the letter warned that the tourism industry is consistently held back by the uncompetitive tax environment in which hospitality and tourism businesses operate.

Angus MacNeil MP, Na h-Eileanan an Iar, said: "A reduction in tourism VAT can be done now without any derogation from Europe. In Scotland more than a quarter of a million people are employed in the hospitality industry and visitors spend almost £5b annually. A reduction in tourism VAT to 5% would provide a significant boost to tourism and jobs in Scotland.

"I hope the chancellor will also recognise the value to the economy of a reduction in VAT on tourism."

Dr Philippa Whitford MP, Central Ayrshire, said: "Scotland, with its wilderness, beautiful coastline, golf and sailing competes directly for inbound tourists with the Republic of Ireland, which levies no air passenger duty and charges only 9% VAT on tourism. We need to see this from the perspective of those tourists and realise that we are holding back our own tourist industry."

The comments in the letter come after a recent review by Dr Andrew Sentance, a former member of the Bank of England Monetary Policy Committee, which concluded that reducing tourism VAT would be a "highly effective" measure to stimulate growth.

Dermot King, managing director of Butlins and chairman of the Campaign to Cut Tourism VAT, said: "Political support for a reduction in tourism VAT has never been stronger or louder and we are delighted that our campaign is being backed by MPs throughout the UK and across the political spectrum. With over two-thirds of MPs in Scotland supporting the campaign as well as MPs in Wales and Northern Ireland, it is time for the Treasury to seriously consider the benefits of a reduction in VAT for tourist attractions and accommodation.

"Having already created one in five new jobs in the last five years, the tourism and hospitality industry has been instrumental in helping this Government reduce unemployment. Dr Sentance concluded that the economic argument put forward by the Campaign is one of the most comprehensive and persuasive ever put before the Treasury, so we look forward to the Government taking action and ensuring that the UK remains a world-class tourist destination."

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