Tourism industry calls for cut in VAT

The four tourism ministers for the UK, Scotland, Wales and Northern Ireland have joined forces to ask the UK Treasury to consider a reduction of VAT for businesses in the tourism industry.

They argue that a VAT cut for businesses in tourism would allow them to better compete with European competitors.

Powers over VAT are reserved to the UK Government.

“Of 28 European Union countries, 25 have reduced tourism VAT, with only Denmark and Slovenia having higher VAT rates than the UK – where the rate is currently 20 per cent,” said Scotland’s Tourism Minister Fergus Ewing.

“We discussed the particular case of the Republic of Ireland, which temporarily reduced VAT on tourism from 13.5 to 9 % in May 2011, but has kept the cut in place because of the benefits its tourism industry has enjoyed as a result.

“We believe that reduced VAT for tourism businesses may have brought important benefits for some states, but more needs to be done to collate hard evidence on the subject.

“That is why the UK, Scottish, Welsh and Northern Irish Tourism ministers have agreed to ask the Treasury to undertake a study on a reduction in VAT and its potential to support the tourism industry.

“With the vast majority of European countries administering lower VAT rates for tourism businesses, and reportedly seeing considerable benefits, the need to look again at this important issue is compelling.”