The new deal announced today which sees the Democratic Unionist Party (DUP) support Theresa May’s government, following the loss of her majority in the election earlier this month has highlighted the disparity in current levels of VAT in the UK and Ireland.
The deal thrashed out and confirmed yesterday sees an additional £1b more spent on Northern Ireland over the next two years, with a report being commissioned into the impact of VAT and Air Passenger Duty on tourism in Northern Ireland “to recommend how best to build upon growing success” of the tourism sector.
The agreement follows a parliamentary select committee signifying in March that it was in favour of reducing tourism VAT.
The Northern Ireland Affairs Committee made the recommendation following concerns from representatives of the tourism sector in Northern Ireland for the future of the land border with the Republic of Ireland following Brexit, and the impact they believe any changes would have on their industry.
Ufi Ibrahim, chief executive of the British Hospitality Association (BHA), said: “The government has recognised the need to examine how Northern Ireland’s businesses are impacted by the UK’s high rates of tourism VAT.
“Reducing tourism VAT across the UK is a key pillar of the BHA’s recommendations to government to support the UK’s fourth largest industry and we look forward to working with the Treasury and leading the industry’s representations to this detailed report.”
Ibrahim highlighted that the UK’s tourism VAT rate at 20% is double the European average. As a result, Northern Ireland’s hospitality and tourism businesses risk losing customers to the Republic of Ireland where tourism VAT is 9%.
“We have been calling for a reduction in UK rate of Tourism VAT to 5% to create 121,000 jobs, increase UK export earnings from tourism and bring in £4.6bn to the Treasury over 10 years,” she added.