Chancellor urged to unlock Scotland’s tourism growth in Autumn Budget
The Scottish Tourism Alliance (STA) has called on the Chancellor to back one of Scotland’s most important industries in this month’s Autumn Budget, with action on VAT and employment costs among six measures it says would help tourism businesses invest, create jobs and grow.
Ahead of the Budget on 28 October, the STA is calling for hospitality VAT to be cut to 10% and for the Government to revisit the increase in employer National Insurance Contributions (NICs).
The overarching association for tourism and hospitality business in Scotland also wants to see tax-free shopping reintroduced for international visitors, VAT removed from visitor levy charges, VisitBritain funding protected in line with inflation and investment in major tourism infrastructure projects in Scotland.
Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance, said: “Our tourism and hospitality sector is a vital part of Scotland’s economy, and there is a significant opportunity for growth, particularly from our international markets.
“We already know that people want to come to Scotland. The opportunity now is to capitalise on that demand, but to do that we have to stay competitive on price and continue to invest in the quality of experience people expect when they get here.
“That is getting much harder for businesses. The cost of doing business continues to bite hard, with increased employment and operating costs and high levels of taxation all putting pressure on businesses and their ability to invest.
“We have been very clear in our ask to the UK Government to lower VAT for our sector to 10% and look again at employer National Insurance. Both would make a real difference to businesses, allowing them to employ people, invest in their product and continue to grow.“We also need to keep driving international footfall. That means continuing to invest in how we market Scotland and the UK overseas, improving our tourism infrastructure and bringing back tax-free shopping. The domestic market is much softer, particularly when it comes to family spending; the cost of doing business continues to bite hard, and we’re potentially also looking at another winter with high fuel costs for both businesses and consumers.”
“Our tourism and hospitality sector has considerable untapped potential as a growth industry and a key export for Scotland. With the right policies in place, it can create more wealth and employment and bring economic benefit to communities right across the country. We need this Budget to recognise that potential and help us turn strong demand for Scotland into economic growth.”
The STA’s six asks for the Autumn Budget
- Cut hospitality VAT to 10%
The STA is calling for VAT to be reduced to 10% for hospitality businesses, including tourism accommodation and paid visitor attractions. It says the reduction would give businesses greater capacity to invest in their product, people and offer, while helping to keep prices down for UK households taking day trips and holidays at home.
- Revisit employer National Insurance Contributions
The STA is supporting calls for the employer NIC threshold to be restored to £10,000 following the impact of the increase on wage costs across tourism and hospitality.
It says the change would help support job opportunities for young people, part-time and seasonal workers who make up an important part of the sector’s workforce.
- Reintroduce tax-free shopping
The STA wants the UK Government to restore tax-free shopping for overseas visitors through a fully digitalised system. It says this would support tourism, hospitality and retail by providing an additional incentive for international visitors to choose the UK, stay longer and spend more during their visit.
- Don’t apply VAT to the visitor levy
The STA is calling for visitor levy charges in Scotland and England to be exempt from VAT, avoiding visitors effectively paying tax on top of a tax. It has also raised concerns about the impact this could have on small businesses, particularly in Scotland’s rural and island communities, which could find themselves pushed over the VAT threshold as a result.
- Protect funding for VisitBritain
The STA is calling for VisitBritain’s current funding to be protected in line with inflation to enable the UK to compete effectively with other destinations for international visitors.
It says revenue raised through Electronic Travel Authorisation charges could potentially be used to support inbound marketing and promotional activity.
- Invest in major tourism infrastructure projects in Scotland
The STA is urging the UK Government to invest in major tourism infrastructure projects with the potential to transform communities, create jobs and businesses, and encourage visitors into less visited destinations. Projects identified include Eden Project Dundee, expansion of Glasgow’s Scottish Event Campus and support for plans to regenerate Stranraer harbour through the creation of an attraction telling the story of Scottish emigration.