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VAT on UK Tourism Gives Europe Competitive Advantage

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Pictured at the House of Commons for the launch of the new report The Impact of Lower VAT Rates on UK Visitor Accommodation and Attractions 2008 are (l to r) BALPPA Vice-Chairman John Bollom, VisitBritain Chief Executive Tom Wright, VisitBritain Chairman Christopher Rodrigues, CBE, co-chair of British Tourism Week Stephen Dowd, and BALPPA Chief Executive Colin Dawson.

British tourism chiefs want Alastair Darling to reduce VAT to the same levels as European competitors to stem a spiraling decline in UK destinations and attractions.

The deficit between how much foreign visitors spend in the UK and how much UK tourists spend abroad has risen from £3.9 billion to £19.4 billion since 1996, while the UK’s overall share of world tourism has shrunk to 4.5%.

All EU member states except for Denmark, Bulgaria and Romania currently apply reduced rates of tax for tourism services. Reduced rate VAT accounts for one third of the entire European tax revenue.

The British Association of Leisure Parks, Piers and Attractions (BALPPA), which represents Britain’s seaside towns, as well as iconic attractions like the London Eye, Blackpool Pleasure Beach, MadameTussauds and Alton Towers, will table a report to the Treasury to mark British Tourism Week (10th-18th March), which calls for a cut in VAT to boost tourism’s earning power and release millions towards the capital investment needed to take on foreign competitors.

The paper shows that a cut to the standard 5% UK reduced VAT rate on tourist attractions admission and accommodation will boost employment and result in gains of up to £760 million savings in social security payments, increased income and corporation tax. It also predicts an additional £440 million will be injected into the industry supply chain.

Lowering VAT on tourism services played a key role in Ireland’s economic revival. Foreign exchange receipts have increased by €170 million since Ireland reduced VAT in 1986.

Colin Dawson, Chief Executive of BALPPA, said:

“Tourism is a price sensitive industry and price is a key consideration people make when choosing a weekend break, holiday or even whether or not to take the kids to London or York for the day. Currently it is often cheaper to visit France or Spain than it is to spend time and money within these shores.”

“The tourism sector has changed out of all recognition since Labour came to power 10 years ago. The advent of cheap flights abroad alongside a reduction in real terms investment has seen billions stream out of the UK and into resorts and attractions operated in Europe and further a field.”

“The industry was a real power house in the 90s but decline has sneaked up on us in recent years. A reduction in VAT for accommodation and entry into tourist attractions would be tax positive, create jobs and provide a real signal from the Government that it values the industry and the contribution it can make to strengthening the economy at this time of uncertainty.”

For information contact: Colin Dawson BALPPA 0207 403 4455 or M 07768 258888
Graham Wason Tourism Strategy – Author 020 7267 0818

 

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