MPs support campaign to cut VAT on hotel bills

A move to cut VAT on hotels and visitor attraction to 5% to make British tourism more competitive has won the support of 63 MPs.

The hospitality and tourism industry claims a cut in VAT, from the standard 20%, would create over 120,000 jobs while adding around £4 billion to the economy.

"There would be an initial hit to the Treasury, but this would be made back inside one parliamentary term," said the British Hospitality Association.

It believes the change can be made without prior approval from the EU as the majority of EU states, including the Republic of Ireland, have all cut their VAT on holiday accommodation.

As well as a public campaign, bolstered by support in The Sun this week, a parliamentary motion tabled two weeks ago by Margaret Ritchie, SDLP MP for South Down, has also generated support in Westminster.

"London has benefited hugely post-Olympics, but towns right across Britain and Northern Ireland have a lot to contribute to the economic recovery," she said. "Cutting VAT on hotels and attractions will enable the many towns reliant on tourism to grow faster and support the excellent work the sector already does employing young and low-skilled people.
 "Ultimately, we are an island and in an increasingly global marketplace we cannot continue to price ourselves out of the equation for tourists who may choose between Europe and Britain and Northern Ireland for their holiday.

"The high level of VAT at home also leaves us in the ridiculous situation where it’s cheaper for people in Northern Ireland and Britain to fly abroad – which is bad news for the environment, the economy and our balance of payments deficit."

Paul Maynard, a Conservative MP for Blackpool North and Cleveleys, said: "I have been a big supporter of this campaign and have made my points very clear to successive ministers. 

"I believe by cutting VAT we will increase levels of incoming tourism, making the United Kingdom much more attractive to visit.  Incoming tourism is new money into the economy of this county and should be encouraged where possible."

Martin Caton, Labour MP for Gower, said: "Providers of tourism-related services in my Constituency of Gower look to their colleagues on the other side of the Irish Sea and see the positive impact of lower VAT rates in stimulating local businesses.

"I have no doubt that the reduction of VAT for the tourism industry in the UK would have significant economic and employment benefits."

Ufi Ibrahim, Chief Executive of the British Hospitality Association, added: "Tourism is a great British success story but we are missing out on tourists because of the high VAT rate. Tourism is the only export industry to pay VAT, and cutting the rate to five per cent will allow us to compete effectively with our international rivals and boost growth.. Securing this VAT cut will help provide young people with jobs when one in five 16-25 year olds are currently unemployed."