Calls to reduce tourism VAT to 5% gets lukewarm response from industry

10 November 2009 by
Calls to reduce tourism VAT to 5% gets lukewarm response from industry

A new campaign calling on the Government to reduce VAT for tourism businesses to 5% has received a lukewarm welcome from the hospitality industry.

The British Association of Leisure Parks, Piers and Attractions (Balppa) has launched the campaign in the wake of Germany's decision to cut the VAT rate on overnight stays in hotels from 19% to 7% from the start of next year.

Balppa is also citing research from France which analysed the effect of VAT cut for restaurants from 19.6% to 5.5% in July. According to the study, commissioned by leading French restaurateur Jacques Borel, the move has boosted the tourism and leisure sector and cut VAT fraud by 74%.

The association believes cutting VAT to 5% for attraction and accommodation providers in the UK would cost £1b a year, but would deliver more than £1.2b a year in benefits to the economy. It estimates that an extra 23,000 tourism related jobs could be created.

The move has been backed by hotel groups such as Travelodge, where a spokesman said: "We would recommend that Government takes a serious look at the VAT reduction as other countries have proved that it not only boosts tourism but would ultimately increase tax revenues for the Treasury."

However, Kurt Janson, policy director at the Tourism Alliance, suggested that VAT may be the wrong area to campaign on.

"In the past we have always supported having VAT rates in the UK which were competitive with other European destinations, but we need to discuss and agree how this ranks with other priorities at the moment," he said.

The British Hospitality Association expressed doubt that the UK Government would agree to a reduction.

A spokesman said: "We welcome the news of the cut in Germany and certainly hope that it will set a trend throughout the EU - but we don't believe that a similar reduction is a realistic possibility in the UK for the foreseeable future."

Asked whether a VAT reduction was realistic, Colin Dawson, chief executive of Balppa, told Caterersearch

Travelodge backs campaign to cut tourism VAT to 5% >>
VAT cut for UK restaurants will not happen, say experts >>

VAT change could cost pub sector £36m to revamp menus and tills >>

Hospitality needs 'radical' approach to VAT to ride out recession >>
Pubs and restaurants can use 15% VAT rate until 6am New Year's Day >>

Restaurateur to continue fighting for VAT break for sector despite knock back >>

By Daniel Thomas

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