A third major parliamentary select committee has come out in favour of reducing tourism VAT. The recommendation by the Northern Ireland Affairs Committee in Westminster, is another massive step in moves to make the UK tourism industry on a level playing field with its European counterparts.
Chair of the Committee, Laurence Robertson commented:
“The tourism industry in Northern Ireland has undoubtedly had some great successes in recent years, and we are optimistic for the future, notwithstanding the current political situation following the elections. The attraction of world renowned sites of natural beauty alongside new attractions, most notably Titanic Belfast, has established tourism as one of the pillars of our economy.
However, in spite of the quality of the tourism product Northern Ireland is able to offer, there are barriers to growth. Levels of VAT and Air Passenger Duty are making businesses less competitive than their equivalents in the Republic of Ireland. We are calling on the UK Government to examine options for reducing these tax burdens on tourism and creating the right environment for the sector to flourish.”
Dermot King, MD of Butlins and Chairman of the Campaign to Cut Tourism VAT, said:
“There is now deafening support from across the UK and the political spectrum for the government to recognise the distinct needs of the hospitality and tourism sector. The UK is at a major competitive disadvantage to European competitors, ranking 140th out of 141 on world price competitiveness. A reduction in tourism VAT could be brought into effect immediately, as there is no need for legislation at the national or EU level.”
Mr King continued “I’ve already called on the government to reduce tourism VAT during school holidays to test our conviction that cutting this tax would help businesses and the public and in the long term the Treasury.”
The Cut Tourism VAT Campaign already has the support of 171 MP across all parties and has secured recommendations from the Culture, Media and Sport Committee and the Welsh Affairs Committee.
Eddie McKeever of McKeever Hotels Group who operates both in Northern Ireland (Tourism VAT at 20%) as well as the Republic of Ireland (Tourism VAT at 9%) said:
“As a family business that operates on both sides of the border I’ve been surprised at the difference it makes. The 11% VAT gap between Northern Ireland and the Republic of Ireland has benefitted my business and guests in the Republic. As a result, I’ve been able to secure more jobs than initially forecasted and has created further jobs in the local community. I hope the UK Government will now understand the benefit and opportunities of reducing tourism VAT. “
The hospitality and tourism industry is the fourth largest industry in the UK, supporting 4.5 million jobs and contributing 10% of UK GDP. Yet, on top of one of the highest VAT rates on tourism in Europe, the industry is grappling with rapid increases in its cost base and the prospect of severe labour shortages as a result of Brexit.
A recent review by Dr Andrew Sentance CBE, a former member of the Bank of England Monetary Policy Committee, concluded that reducing tourism VAT would be the single most effective taxation reform for stimulating growth, and that the Campaign’s economic argument was one of the most comprehensive cases ever put before HM Treasury.