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A VAT cut for the UK tourism industry would deliver a £4bn boost to the economy and a £3.9bn tax windfall for the Treasury, according to a new report being handed to the government today.
Commissioned by the Cut Tourism VAT Campaign, The Nevin Report says that a cut from 20% to 5% for accommodation and attractions would massively boost the UK’s tourism economy and cost the exchequer nothing after five years.
This comes alongside a boost of £4bn to GDP each year and the creation of over 120,000 jobs around the UK, the report claims.
Political backing for the Cut Tourism VAT Campaign has grown massively, with over 70 politicians signalling their support.
Nick Varney, chief executive of Merlin Entertainment, said: “Doing a few fancy posters saying ‘Heritage is Great’ and putting them up at Shanghai Airport is not going to turn around 30 years of constant decline. If all UK holidays became 15 per cent cheaper, economics tells you what’s going to happen.”
The UK is currently one of the most expensive destinations of holiday in the world, ranked 138 out of 140 for price competitiveness by the Travel and Tourism Index, and one of just four countries in Europe not to have reduced VAT for the tourism sector.
This is despite that the fact that tourism is one of the UK’s largest businesses, employing over 3.1 million people and generating £127bn towards GDP in 2013.
The report, produced by Michael Nevin Associates, reveals that similar cuts made in France, Germany and Ireland in the last five years have been hugely successful, and that a cut in the UK would boost investment, jobs and visitor numbers for the UK’s tourism economy.
A cut would also help the wider economy. The report states for each £1 spent in the tourism industry, 70p extra is spent in other sectors, and that cutting VAT would help stem the UK’s tourism balance of payment deficit – the amount spent by UK residents on international holidays compared with tourists coming in – which currently stands at £14bn. For every one person that comes into the UK, two more leave.
Image courtesy of VisitEngland/Diana Jarvis
