44 SNP MPs have today written a joint letter to the Chancellor of the Exchequer, George Osborne MP, urging the Treasury to commission new research into the benefits of reducing the rate of VAT on tourism following a joint call by the DCMS and the Devolved Administrations.
Tourism in Scotland is at a major competitive disadvantage compared to other EU countries, because VAT in the UK is applied at the standard rate of 20%, whereas nearly all other EU member states have implemented a reduced rate on visitor accommodation and, in many cases, on tourist attractions too.
The letter highlights the importance of the tourism sector to the economy in Scotland. Over the past five years, the hospitality and tourism industry has created one in five new jobs in Scotland where it accounts for 7% of total employment. However, the letter warns that the tourism industry is consistently held back by the uncompetitive tax environment in which hospitality and tourism businesses operate.
A recent review by Dr Andrew Sentance, a former member of the Bank of England Monetary Policy Committee, concluded that reducing Tourism VAT would be a highly effect measure to stimulate growth and that the economic argument put forward by the Campaign was one of the most comprehensive cases ever put before the Treasury.
Angus MacNeil MP, Na h-Eileanan an Iar, said:
“A reduction in Tourism VAT can be done now without any derogation from Europe. In Scotland more than a quarter of a million people are employed in the hospitality industry and visitors spend almost £5bn annually. A reduction in Tourism VAT to 5% would provide a significant boost to tourism and jobs in Scotland.
“I hope the Chancellor will also recognise the value to the economy of a reduction in VAT on tourism.”
Dr Philippa Whitford MP, Central Ayrshire, said:
“Scotland, with its wilderness, beautiful coastline, golf and sailing competes directly for inbound tourists with the Republic Ireland, which levies no Air Passenger Duty and charges only 9% VAT on tourism. We need to see this from the perspective of those tourists and realise that we are holding back our own tourist industry”
Dermot King, MD of Butlins and Chairman of the Campaign to Cut Tourism VAT, said:
“Political support for a reduction in Tourism VAT has never been stronger or louder and we are delighted that our Campaign is being backed by MPs throughout the UK and across the political spectrum. With over two-third of MPs in Scotland supporting the Campaign as well as MPs in Wales and Northern Ireland, it is time for the Treasury to seriously consider the benefits of a reduction in VAT for tourist attractions and accommodation.
“The Campaign has worked closely with a former member of the Bank of England Monetary Policy Committee, Dr Andrew Sentance CBE, who found that reducing tourism VAT appears to be a highly effective measure for stimulating growth. Having already created one in five new jobs in the last five years, the tourism and hospitality industry has been instrumental in helping this Government reduce unemployment. Dr Sentance concluded that the economic argument put forward by the Campaign is one of the most comprehensive and persuasive ever put before the Treasury, so we look forward to the Government taking action and ensuring that the UK remains a world-class tourist destination.”