MP calls for VAT reduction for tourism sector

Laura Foster

Laura Foster

24 April 2018

Among the many things to worry about when it comes to Brexit is its impact on tourism and hospitality, and Liberal Democrat MP Christine Jardine has come out fighting for the sector with a call for a VAT reduction for tourism.

‘Tourism encompasses about 250,000 small-to-medium-sized businesses (SMEs) across the UK, and its growth is on a par with that of our digital industries,’ she argued in a recent debate at the House of Commons.

‘It supports approximately 3 million jobs… [and] brings in about £127 billion a year to the UK — 9% of GDP. Around 37 million visitors come here every year, and in 2016 almost 70% of those visitors and 44% of what they spent came from other EU countries. Eight of our top 10 in-bound tourist markets are other EU states. Those visitors may now think twice about coming here.’

Jardine argued that tourists from other markets were less likely to replace the lost EU visitors, as they will be coming from long-haul destinations.

‘Twenty-five members of the European Union currently vary VAT on the tourism industry,’ she continued. ‘In France, for example, it is only 9% for a hotel or a tourist attraction. It would be possible today for the UK Government to vary VAT on the tourism sector.’

Unsurprisingly, UKHospitality has come out in support of the proposed cut. ‘A reduction in VAT to 5% would provide a significant boost to tourism, allowing it to reach its full potential,’ declared UKHospitality CEO Kate Nicholls.

‘Tourism is an industry which reaches every corner of the UK… Independent research has shown that over 10 years, a reduction would produce £4.6bn in revenue, and provide over 100,000 jobs across the UK and we urge the government to support this uniquely beneficial and common-sense policy.’

The Liberal Democrats have previous form in backing cuts in VAT for tourism, which the British Hospitality Association — one of the organisations that has since gone on to form UKHospitality — had extensively lobbied for.

Whether the government will act upon the proposal, however, remains to be seen.

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