I recently met with Cut Tourism VAT campaigners in Westminster. As their title suggests their aim is to reduce VAT on tourist accommodation and attractions from 20% to 5%. Tourism and hospitality employs 14% of the UK workforce, supporting 4.5 million jobs. Tourism is Britain’s fourth largest industry, equivalent to £143 billion annually. That makes it bigger than steel, pharmaceutical and aerospace combined. Reducing VAT on tourism, it is claimed, could improve the UK trade balance by £23 billion over 10 years.
Across Europe 31 different countries are already enjoying reduced tourism VAT, while the UK has one of the highest rates, making it one of the most expensive places to visit.
Reducing VAT on tourism could complement the resurgence of seaside towns where 1 in 10 jobs are dependent on the industry. Tourism is a key employer of young and lower skilled workers and reducing VAT will, it is argued, create more and better jobs. Perhaps then the tourism sector will get the respect it deserves, as it tends to in other countries.
The UK could cut VAT for tourism immediately without new domestic or EU legislation. There is strong support from Wales, Scotland and Northern Ireland but the current VAT rules require the whole country to be treated the same. Change that, and the advantages of cutting Tourism VAT could be targeted regionally and to our coastal areas. It is at least worth serious consideration.