VAT rate must be cut to 5%

18 February 2011
VAT rate must be cut to 5%

We all know, that the Government is having to make tough choices in the face of the economic downturn. The coalition has chosen to tackle the deficit with a combination of higher taxes and expenditure cuts, and will ultimately be judged on the success of this strategy at the next General Election.

Raising the VAT to 20%, however, has truly brought home to those of us in the leisure industry just how tough successive governments have made it for our industry to compete against our European competitors.

One of the biggest complaints that people have, both in the UK and abroad, is that our hotels are just too expensive.

Since 1975, EU law has enabled the UK Government to introduce a reduced rate of VAT of 5% for hotels and attractions.

Incredibly, at 20%, we now have the second-highest rate for hotels in the EU. Twenty-one countries have pro-actively used the EU legislation over the years and introduced a reduced rate for accommodation. The average across our major competitor nations, such as France, Spain, Italy and Germany, is 7.6%.

From 5 May 2009, it has also been possible, thanks to the lobbying of the French government, for EU countries to introduce a reduced rate of VAT for restaurants. Thirteen countries have done so to date, with France bringing their rate of VAT down to 5.5%.

Both the Labour and coalition governments have refused to consider reducing VAT despite compelling evidence that by doing so, we will actually create jobs and increase the number of overseas visitors to the UK.

Now is the time for us to make our voice heard and tell all of the political parties that reducing VAT for our industry will not just make us more competitive. It will create the one thing that this country needs more than anything else: hundreds of thousands of sustainable jobs.

The coalition has said that our industry can be at the forefront of leading the UK out of recession but we need more than words. As an industry we have to prove that Britain is open and willing to take business at a reasonable price. Otherwise my fear is that we will lose out in the long term.

Cutting VAT to 5% would enable us all to capitalise and kick-start the employment-led growth in our economy that the country desperately needs.

The time has come for VAT to be cut.

Caterer VAT survey," target="_blank" rel="noreferrer">Weathering the VAT storm

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