The consultation on the impact of VAT on tourism in Northern Ireland offers great encouragement for a UK wide hospitality reduction, says Dermot King
Since I last wrote in this publication with an update on the campaign to Cut Tourism VAT there has been a significant step forward with the launch of a consultation into VAT on tourism in Northern Ireland.
The campaign, of which I am chairman, argues for a UK wide reduction in VAT in the tourism sector from 20% to 5% with the aim of making Britain's hospitality and tourism industry more internationally competitive. Tourism is one of a limited number of goods and services that the EU permits to have a reduced rate of VAT yet out of 28 European nations, the UK is one of only three countries that do not currently levy a reduced rate of VAT on tourism. This puts our industry at an inequitable disadvantage to our European neighbours as destinations on the continent are often viewed as being greater value for money.
In the Spring Statement, the Chancellor announced a consultation on the impact of VAT on tourism in Northern Ireland, with a view to making recommendations for change to the current system at the Budget in the autumn. The launch of the consultation offers great encouragement, as a successful outcome would be a major step forward in helping us achieve our ultimate goal of a UK wide reduction.
The campaign will be submitting evidence to the consultation, laying out the exhaustive research that has been conducted for a number of years that shows the clear benefits of a reduction. We urge all hospitality businesses to contact their local MP to detail the benefits of a reduction.
Independent research demonstrates that a reduction in VAT on tourism in Northern Ireland would give a substantial boost to its economy, creating around 8,500 jobs and increasing visitor numbers by up to 16%. Significantly for the campaign, the demonstrable benefits of a reduction in Northern Ireland would strengthen our argument for a cut in tourism VAT across the rest of the UK.
Tourism and hospitality are one of the UK's economic crown jewels, generating billions of pounds for the exchequer each year and employing nearly 15% of the country's workforce. It is Britain's fourth largest industry, employing people across the country.
We need, though, more support from government in growing the industry. This is particularly prescient in our coastal communities, which have witnessed declining visitor numbers and stagnating economic growth due, in large part, to a lack of price competitiveness with rival destinations on the continent. A cut to VAT in tourism in these areas would be one step on the path to regenerating these areas.
The campaign is focussing initially on a reduction to 5% on visitor accommodation and attractions, with a view to extending the reduction to restaurants and bars once the benefits a cut have been clearly demonstrated. France, Belgium and Finland have all successfully followed this path and we believe replicating this is our best chance of success.
The campaign to Cut Tourism VAT has the backing of over 150 MPs and rising from across all political parties, leading select committees, three national newspapers and 46,000 businesses nationwide.
Dermot King is chairman of the Campaign to Cut Tourism VAT and managing director of Bourne Leisure
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