The Jacques Borel-led campaign to reduce the level of VAT in the hospitality sector from 20% to 5% has launched an industry wide consultation on the next steps in the campaign after the success of Tax Equality Day last month, writing to supporters asking for views and suggestions on how the campaign should progress.
The September “Tax Parity” campaign, which saw vat price cuts by over 50 companies to highlight the benefits of lower VAT to customers, generated more than 360 individual press cuttings, with coverage of the day by many national newspapers.
In a letter to campaign supporters and others, Borel states: “This has helped get the inherent unfairness of the current VAT regime over to the general public. I believe that public and political support will continue to grow and will influence economic policy when the Chancellor is seeking radical policy initiatives to address youth unemployment and stimulate economic growth. Our aim is that all parties should adopt VAT realignment in their manifestos and perhaps compete with each other as to its extent.”
Borel also reports meetings with a number individual members of the Houses of Parliament in the last year, stating that reactions from MPs are “almost entirely positive and supportive’.
He states: “It is true and not unexpected that the government reaction has been negative but this is consistent with my experience lobbying in other countries where changes of heart become evident at the last minute.”
The letter to supporters suggests that the next step in the campaign might be for businesses to adopt a ‘Business Pledge’ that allocates the value of reduced VAT: 60% returned to consumers by way of reduced prices; 20% allocated to investment in facilities and improvements in the building fabric – and thereby having a multiplier effect; 10% earmarked for payroll benefit; 5% invested in staff training and apprenticeships; 5% in retained profits and dividends.
Borel acknowledges that withdrawing a reduction in VAT on alcohol from the campaign’s demands might be a ‘realistic concession’ at some stage although the demand might be retained for alcohol served with a meal.
In the letter, Borel adds: “Our most recent research (Growth and Jobs Report dated 30 April 2013) shows a net cost to the exchequer of £0.8bn and more than 670,000 jobs created for a VAT reduction from 20% to 5% for the hospitality sector only. We are currently updating this research and especially looking at the impact on the shadow economy. Lower VAT on labour-intensive services such as hospitality and tourism would provide a major stimulus to jobs and growth, reduce pressure on the benefits system and slash youth unemployment.”