Calls made to cut VAT for tourism businesses
Calls are being made by politicians and businesses in Scotland to drive up investment and tourism by cutting VAT for the sector.
The CUT Tourism VAT campaign wants to encourage more visitors to Scotland, and to make British tourism more competitive with Europe, where many countries pay as little as 5% VAT on accommodations and attractions.
Research has shown that reducing the rate – which is allowed under EU law – would allow lower prices and increased investment into attractions and accommodation, which would boost jobs and attract more tourists.
Numerous local and national businesses have also backed the campaign, who want to see growing support from Westminster for policies that will add to regional economies, and allow them to compete on a level playing field with Europe.
While Prime Minister David Cameron pledged to support tourism, few places outside of London have felt much of a boost – with many seeing a decline in visitors as the improving economy again sees more Brits holidaying abroad.
Tourism contributes over £11.6bn annually to Scottish GDP, 10.3% of the total, and remains one of the largest regional employers – supporting 292,000 jobs, or 10.9% of the Scottish workforce.
Supports have said a VAT cut would allow operators to lower prices, invest more in facilities, and increase the number of employees – attracting more visitors.
They cite studies by Deloitte established in 2011 that a cut in VAT would create 80,000 jobs, and generate 2.6bn for the treasury over ten years. A separate study by Treasury adviser Professor Adam Blake, using the Governments own computer modeling, concluded in 2012 that cutting tourism VAT would add £4bn per annum to GDP, and is "one of the most efficient, if not the most efficient means of generating GDP gains at a low cost to the exchequer."
The change would offer a vital boost, encouraging regional economic growth in areas still suffering from the effects of the recession.
Tourism nationally employs 3.1 million, with more than 75% employed outside of London. Many of these are young workers – who have been hit disproportionately hard by the recession – with 39% of employees under 30, compared to the national average of 22%.
Graham Wason, chairman of the CUT Tourism VAT campaign, said: "Scotland continues to have a thriving tourism sector but potential growth is being hampered by the startling anti-competitive stance we have at the moment with such high levels of VAT relative to other EU states. Crucially, this is about support domestic investment and jobs in places that all too often get overlooked."
