Lib Dems back plan to cut VAT rate for tourism

24 September 2015

A cut in VAT for domestic tourism from 20% to 5% has been called for by the Liberal Democrats, the first main political party to back such a move. The new policy was decided at the party's annual Federal Conference in Bournemouth.

Those backing the policy drew comparisons with the rest of Europe. Welsh Liberal Democrat shadow economy minster, Eluned Parrott AM said: 'Tourism accounts for 10 per cent of our economy and employs three million people, with nearly half of those jobs taken up by young people. But we have some of the higher VAT laws in Europe, with the vast majority of EU countries having already lowered the tax on the industry.'

According to the British Hospitality Association (BHA), the UK has the second-highest rate of VAT on hotel accommodation in the EU. In addition, 25 of 28 EU states have already cut tourism VAT. 'The UK's Tourism deficit has been in excess of £10bn for far too long, said BHA chief executive Ufi Ibrahim. 'It's time to ensure tourism taxes do not deter more Britons from enjoying the UK staycation, and do not impede our ability to attract greater numbers of international visitors, especially beyond London.'

Lib Dem leader Tim Farron MP said: 'Local hotels, B&Bs and tourist attractions are the backbone of our economy and I think they need more help and support.'

The Campaign to Cut Tourism VAT now has the support of over 125 MPs. The campaign argues that the cut would mean greater tax revenue, increased exports, stronger regional growth, higher employment, and more.

According to the campaign, the reduced rate would apply to accommodation, admission fees and 'restaurant services'.

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