Cut Tourism VAT Campaign
Cut VAT Campaign Latest (updated Feb 2017)
2016 Review of the Cut Tourism VAT Campaign
2016 was a busy year for the Campaign to Cut Tourism VAT, which has gone from strength to strength and is now supported by over 170 other Members of Parliament from all political parties. This email provides a summary of the Campaign’s activities in the past 12 months.
Our industry will be hard hit by Brexit, the extent of which will depend on the deal reached with the European Union. The loss of access to the Single Market, immigration restrictions, potentially less straight forward passport and visa rules, and tariff barriers could all impact on tourism. However, Brexit also provides an opportunity for the UK government to simplify the current UK tax system and move away from EU VAT rules and regulations. Our efforts to persuade the government to reduce VAT to support the British tourism industry will continue.
As the Chairman of the Campaign I met Rt Hon David Gauke MP, Chief Secretary, in December to discuss the various ways in which a reduction in tourism VAT could be implemented. This was a useful meeting in which the Campaign put to the Minister the suggestion that a pilot scheme could be run to measure the success of the initiative.
Reducing Tourism VAT was included as one of seven recommendations in the British Hospitality Association’s (BHA) “Creating Coastal Powerhouses” report launched in summer 2016. The report identified common challenges faced by communities on the UK’s coasts. After a meeting with the Minister for Coastal Communities, Rt Hon Andrew Percy MP, the Campaign is now seeking a meeting with the Secretary of State, Rt Hon Sajid Javid MP. The BHA has also been liaising with Number 10 on the importance of rejuvenating coastal communities.
Dr Andrew Sentance CBE Review of Economic evidence
Dr Andrew Sentance CBE, former member of the monetary policy committee, published a report in April 2016 reviewing the Campaign’s economic data. He concluded that reducing tourism VAT would be the single most effective taxation reform for stimulating growth, and that the Campaign’s economic argument was one of the most comprehensive cases ever put before HM Treasury.
The Environment, Food and Rural Affairs Committee has been running an inquiry on rural tourism. Many of the members and witnesses spoke in favour of reducing tourism VAT.
The Northern Ireland Affairs Committee is finalising its inquiry on “Promoting the tourism industry in Northern Ireland through the tax system”. The Campaign provided oral evidence last year and the report is due shortly.
The Campaign has received considerable media coverage across all platforms over the last year. Sharing our positive message through outlets such as Radio 4, Sky News, The Times and The Independent, and in trade and local media, has been crucial to the progress of the campaign. With our support, The Financial Times, The Mail on Sunday and The Mirror have all come out in favour of a reduced rate of tourism VAT.
Hospitality and Tourism Day at Parliament
The success of the BHA Hospitality and Tourism Day at Parliament in September 2016 provided many opportunities to meet parliamentarians and seek follow-up ministerial engagement on the CTV issue. The next such day will take place on the afternoon of 10 October 2017 with hospitality businesses from across the country coming down to Westminster to lobby MPs and peers.
And finally - don’t blame it on the weather...
Many have argued that British tourism suffers on account of the UK’s climate; however in a sample of 11 European countries, two of the two countries with the highest international tourism receipts per capita - Ireland and Switzerland - are among the wettest and coldest countries in the sample.
New All-Party Group to Lobby on VAT (updated August 2015)
A new All-Party Parliamentary Group (APPG) on the Visitor Economy has just been announced. Its purpose is to promote measures to improve local visitor economies, including a reduction of VAT on tourism. Co-Chairs of the new group are Margaret Ritchie MP (SDLP) and Nigel Huddleston MP (Con) and there are seven vice chairs:-
- Albert Owen MP (Labour)
- Dr Philippa Whitford MP (SNP)
- Mark Williams MP (Liberal Democrat)
- Caroline Lucas MP (Green)
- Sammy Wilson MP (DUP)
- Danny Kinahan MP (UUP)
- Hywel Williams MP (Plaid Cymru)
The BHA has appointed as Secretariat to the APPG and will work with MPs to devise the group’s programme during summer. As part of this they will be hosting a Hospitality and Tourism Lobby Day on 16 September 2015 where business leaders will visit Parliament to make their voices heard on key issues affecting the industry.
Currently 25 of 27 EU countries have reduced tourism VAT. The UK’s current rate of 20% is almost twice the European average which undermines competitiveness against countries with lower rates of VAT.
Margaret Ritchie MP, said: “The tourism industry is central to many sectors of the economy in Britain and Northern Ireland - in fact in some it can be the catalyst for economic growth and job creation. It provides enormous potential for growth and productivity.
“The APPG will focus on how we can enhance the UK's local economy by discussing measures and incentives such as a reduction in tourism VAT. We have a real opportunity to boost tourism, and with the APPG's Cross Party support, I have renewed confidence that our voice can be heard across Parliament, in the Treasury and in wider Government circles.”
Nigel Huddleston MP, said: “The tourism industry is a crucial part of the UK economy and there is still much we can do to support it efficiently and effectively.
“We want to challenge the current perception of tourism in the UK by emphasising the many benefits that it provides to our economy. Whilst we recognise and celebrate the success of London’s booming tourism industry, we aim to raise the profile of other tourist destinations across the UK, such as Mid Worcestershire.”
Dermot King, chairman of The Cut Tourism VAT Campaign and MD of Butlins, said: “The formation of the All-Party Parliamentary Group on the Visitor Economy is a further signal that momentum is building for a common-sense cut to tourism VAT for the benefit of all society. Our European counterparts have had the competitive advantage for far too long in attracting visitors that drive economic recovery. I invite politicians from across the political spectrum to speak to our campaign and learn about the case for boosting the UK economy through tourism.”
Ufi Ibrahim, chief executive of The British Hospitality Association, said: “It is imperative that politicians mobilise to sustain pressure on both Parliament and Whitehall to deliver further economic success for the UK through the powerful potential of hospitality and tourism. There is a terrific opportunity to hold the Prime Minister to account on his recently announced plan to support our industry with a vision that creates more growth, jobs and security for working people. The private sector is ready to rise to this challenge and looks forward to working with politicians to make it a reality.”
Caroline Lucas MP, said: “Cutting VAT on tourism would make a real difference to local businesses and help create jobs for people in Brighton and Hove, especially for young people. It would also make a day out for local families for more affordable, and provide another reason for people to take their holidays in the UK.
“With the VAT rate on Tourism in Britain at almost double the EU average we risk losing out on the benefits of tourism. I’m very proud to be a member of the APPG on the Visitor Economy – and I hope we are effective in creating more decent jobs in Brighton’s economy by convincing the Government to cut VAT on tourism.”
Mark Williams MP, said: "The creation of the new All Party Group adds further momentum to our campaign to reduce VAT on visitor attractions and visitor accommodation, a provision available under EU law, but something successive UK governments have failed to enact here. We are one of only three EU countries which refuse to reduce VAT on this pivotal sector. The new All Party Group, with members from all political parties across Westminster, will continue to press the Government on this issue."
Order your ‘Cut VAT Campaign’ Postcards (updated August 2014)
The Cut VAT Campaign has secured a fantastic increase in media coverage in recent weeks. An increasing number of MPs are also signing up. To ramp up the pressure further on the Chancellor, the Campaign has produced a postcard for tourism businesses to encourage customers, friends and colleagues to send to the Treasury. You can order a supply of Cut VAT Campaign postcards from [email protected].
Tourism VAT cut would offer economy £4bn boost says new economic study (updated August 2014)
A VAT cut for the UK’s tourism economy would lead to a £4bn annual boost to GDP, and £3.9bn Tax windfall for the Treasury according to new research by Michael Nevin Associates handed to Government this month. Michael Nevin Associates are one of the UK’s foremost economic forecasters.
Commissioned by the Cut Tourism VAT Campaign, the report says that a cut from 20% to 5% for visitor accommodation and attractions would massively boost the UK’s tourism economy - alongside a stimulus to GDP each year that will peak at £4bn per annum and the creation of over 120,000 jobs around the UK. The report reveals that similar cuts made in France, Germany and Ireland in the last five years have been hugely successful.
The new report adds to a Deloitte study conducted in 2011 and analysis by Prof Adam Blake using the Treasury’s own model in 2012 who said: ‘‘cutting Tourism VAT represents one of the most, if not the most efficient, means of generating GDP gains at a low cost to the Exchequer.”
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, benefitting retailers, the construction sector and a host of others – while reducing the shadow economy.
The report states that cutting VAT would help stem the UK’s tourism balance of payment deficit, (the amount by which the sums spent by UK residents on international holidays exceeds spending by tourists coming in) which currently stands at £14bn for every one person that comes into the UK for a holiday, two go out.
Thousands of tourism businesses and a rebellion among back bench MPs are currently ratcheting up the pressure on the government to make the UK’s tourism sector more competitive.
The UK is currently one of the most expensive holiday destinations in the world, ranked 138th out of 140 for price competitiveness by the Travel and Tourism Index, and one of just four countries in Europe not to have a reduced rate of 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 of GDP in 2013 – and a cut would give a vital boost to regional business and economies reliant on the industry.
Sun Launches ‘Stick Your VAT’ Campaign (updated 11th July 2014)
The Sun has come on board with the efforts to persuade government to reduce VAT on tourism services through their #StickYourVAT campaign. But your involvement is crucial to make the most of this attention and put the Government under real pressure.
If you haven’t already please:
- Sign the The Sun’s petition and ask your customers, family, staff and guests to sign. The more signatures the more pressure the Campaign can have on Government.
- Download and display the #StickYourVAT campaign poster (and send us a photo!)
Major campaign launched to cut tourism VAT as regions tell chancillor: Give us a break (updated 30th June 2014)
The tourism industry, backed by MPs from all parties, has launched a major campaign to cut VAT on hotel accommodation and tourist attractions to 5% in a bid to give Britain’s regions a helping hand.
Hundreds of companies big and small have been calling on George Osborne to make the change to enable the many regions dependent on tourism to invest in jobs and offer a better deal to tourists who can find cheaper holidays abroad.
The Sun, Britain’s best-selling daily newspaper, is today backing the push with Give Us A Break, a campaign highlighting how Chancellor George Osborne can give Britain’s hard-pressed regions a knee-up that will benefit everyone over the long term.
Experts predict the change could create more than 120,000 new jobs.
Tourism chiefs, together with a growing army of MPs, are calling on Mr Osborne to reduce the rate of VAT on hotel accommodation and attractions to 5% - which EU law enables it to do freely. This would make domestic holidays cheaper for Britons and the UK tourism industry more competitive internationally – in the face of the strengthening pound pushing people to head abroad.
Thousands of supporters range industry bodies such as the BHA and BALPA, to small B&Bs, family run attractions, zoos and major international brands.
As tourism is an extremely price sensitive industry, a reduction in VAT to levels competitive with all the other countries in the EU would make the UK much more attractive to foreign tourists and would create thousands of new jobs, many of which would be suitable for the unemployed.
For every additional jumbo jet that arrives in the UK from China, £1m is added to the UK economy, £200,000 goes to the Exchequer and 20 full time jobs are created.
The tourism sector currently runs a £17billion deficit because five British people go abroad on holiday for every two foreign visitors who come in. This situation will only worsen as the pound gets stronger.
Britain is now only one of four European countries to not have cut holiday taxes – and one of them, Lithuania is cutting its VAT next year.
While the UK government insists on charging all holidaymakers with 20% VAT, countries like Portugal, Holland and Belgium levy just 6% tax on all hotels, holiday camps and tourist attractions.
France and Spain charge 10% tax on staying in hotels and holiday parks, while VAT in Germans hotels is just 7%.
As a result, a one-week family holiday in a mobile home in a holiday park in south-west France costs nearly £150 less than an identical holiday on Britain’s South Coast at Bognor Regis.
Key benefits of cutting VAT on accommodation and attractions:
The creation of 120,000 jobs around the UK
Making Britain more competitive against European neighbours
Encouraging economic growth, investment and jobs outside of London
A 4/5bn gain to the exchequer over 10 years
A gain of 4.1bn annually to UK GDP
Comparison of VAT rates across Europe: click here to view
Latest News from the Cut Tourism VAT Campaign (update 12 Feb 2014)
It has been a great week for the Campaign in Parliament. Tuesday saw one of the best attended debates in Westminster Hall where MPs made powerful arguments in support of our campaign.
There were 25 speeches and other interventions made during the debate. It was impressive how – thanks to your hard work in lobbying – MPs made good use of all of the arguments, evidence and briefings in favour of a tourism VAT reduction. The message is getting through that cutting VAT on tourism would not just be good for our businesses but also for families going on holiday, our local communities and for creating new jobs.
And yet these arguments, many put forward by Government MPs, didn’t manage to move the Minister, Exchequer Secretary David Gauke, who stuck resolutely to the HM Treasury line that a reduction is unaffordable. And disappointingly the Labour Shadow Minister was unable to commit to anything.
Nevertheless, the debate represents a huge step forward in pushing the cause of reduced Tourism VAT up the political agenda. There was strong support from MPs of all parties, representing many different areas of the UK. The debate was so popular that the Chair of the debate had to cut the time allowed for speeches from the usual 15 minutes to 3.5 minutes.
MPs are so keen to speak for a Tourism VAT reduction that the issue has already come up in Parliament in three other debates since Tuesday. You can read each one in links at the side of this email.
The Government is now coming under real pressure notably from many of their own MPs. With a General Election coming up this year represents a great opportunity – let’s make sure we take advantage of it!
Parties Come Together for Debate on Tourism VAT (updated February 2014)
London, 11th February 2014: More than 28 MPs from all parties united in Westminster today to urge the Government to reduce VAT on the tourism sector. This follows a high level campaign by the tourism industry as 24 out of 28 EU countries such as France and Spain enjoy vastly reduced tourism VAT unlike the UK where we still pay 20 per cent.
In a Westminster Hall debate in the House of Commons today, MPs urged the Government to cut the rate to 5 per cent because British holidaymakers are paying almost twice or more as much VAT compared to breaks in France, Germany, Italy and Spain.
Simon Hart, MP for Carmarthen West and South Pembrokeshire, urged the Treasury to rethink their stance on a reduction on VAT:
“It seems to me we have a situation where it is the Treasury versus everybody else ... and it can’t be completely true to suggest that the Treasury is always right and the experts in the industry are always wrong.
“The circumstances have changed because of the weather but they have also changed over a longer period of time because of the improved economic conditions and because of the evidence that has been put before us by experts in this particular field. I would suggest that the Treasury take into account these changing circumstances.”
Margaret Ritchie, MP for South Down, who called the debate, said: “To have a reduction in VAT is very important from a tourism point of view from the perspective of economy and jobs. Tourism is an absolutely vital industry for our islands, providing 10% of the GDP and supporting over two million jobs in the UK.”
Despite coming under pressure from the 28 MPs who attended the debate, Treasury Minister David Gauke refused to accept independent evidence provided by the industry that a VAT reduction would quickly lead to more jobs and increased tax revenue.
Further research by a Treasury adviser, Professor Adam Blake - who used the Treasury’s own economic model - concluded that cutting tourism VAT is "the most efficient, if not the most effective, means of generating GDP gains at low cost to the Exchequer that I have seen with the CGE model".
The Intercontinental Hotels Group’s Chief Operating Officer UK & Ireland, Stephen McCall said:
"The current rate of VAT on visitor accommodation and attractions undermines our sector's ability to compete. A cut in the rate of VAT will encourage more UK residents to take short breaks here and encourage more foreign travellers to visit the UK.
“Tourism has created a third of all new private sector jobs since 2009 in spite of the VAT rate. We'd like to be able to fulfil our potential."
Graham Wason, Chairman of the Cut Tourism VAT campaign said:
“We are delighted at the all-party support shown for reduction in this first debate on Tourism VAT in parliament. It was a fantastic turnout of 28 MPs. All except the Minister responding were convinced of the need for a cut on VAT for visitor accommodation and attractions and many references were made to evidence, using a Treasury approved financial modelling system, the positive impact for the UK economy this would have.”
For more information please contact Vernon Hunte at Cut Tourism VAT on 020 7404 7744, [email protected].
September 2013 (Update)
From now until the General Election the Cut Tourism VAT campaign team will be focusing on gaining political traction meeting with local MPs, candidates, local businesses and groups to make the case in key constituencies. The arguments for the Campaign are well supported by independent expert research, data and precedent of other countries. However, it is the political case that needs to be won. There are three key points to make:
- The UK is the only major tourism destination in the EU without a reduced Tourism VAT rate – all others have recognised the benefits and are taking advantage already
- A Tourism VAT reduction actually increases tax revenue – by £2.6 billion over ten years. Also 80,000 extra jobs will be created
- Lower tourism VAT will be popular with voters – especially hard-working families and the “squeezed middle” who will be better able to afford a day trip or staycation.
Hastings and Rye in East Sussex will be one of the first ten Campaign target seats. If you are a TSE member in the area please contact [email protected] for more information about how you can be involved.
Earlier in September the new Campaign Advert went live with its first unveiling in the official Parliamentary publication the “House” Magazine. You can download a copy here.
August 2013 - Latest News on the Reduce VAT Campaign
It has been a busy time for the Campaign with coverage occurring in newspapers across the country.
Already it is showing an impact: last week the Prime Minister was asked about the case for reducing VAT during a public forum in Manchester. He replied (you can listen to audio of his full answer here) that “There are always good cases for cutting VAT on individual items. The leisure industry and the hotel industry make a very good argument, but as do lots of other industries… so people have to come up with a very good argument before it gets accepted.”
The independent evidence shows that reducing tourism VAT would be one of the most efficient means of generating GDP gains at low cost to the Exchequer. As an industry we have the strongest case for a reduction and the Campaign is bringing this directly to the attention of the Prime Minister.
The challenge now is to make the Prime Minister, his colleagues and representatives of all parties aware of the clear evidence that cutting tourism VAT is in the national economic interest, to the benefit of British businesses and British families. The Campaign needs you to write to your local newspapers, engage with your MPs and speak within your communities.
A recent survey shows that more than two-thirds of British holidaymakers thought it unfair that UK families pay more than double the VAT for a domestic holiday compared to Germany and France.
If you would like to become an active spokesperson for the Campaign please email [email protected]
The formal launch of the Cut Tourism VAT Campaign took place on 4 December 2012 at the Tourism All Party Parliamentary Group meeting in Westminster. A factsheet supporting the campaign can be downloaded here.
Ufi Ibrahim (Chief Executive of the British Hospitality Association) and Graham Wason (Cut Tourism Vat Campaign Group) will be launching the campaign to reduce VAT on accommodation and attractions to 5% in order to improve the UK’s international competitiveness and increase revenue and employment for the UK economy.
The launch included the release of a new econometric study by Deloitte/Tourism Respect using HM Treasury's Computable General Equilibrium Model. This study concludes that reducing VAT on accommodation and attractions is “one of the most efficient, if not the most efficient, means of generating GDP gains at low cost to the Exchequer that we have seen with the CGE model”.
Visit the Cut Tourism VAT campaign website to find out more.
On the 8th January Margaret Ritchie (SDLP – South Down) tabled an Early Day Motion calling on the Government to reduce VAT for the hospitality sector to support the UK tourism industry.
That this House recognises that local restaurants and pubs are facing very challenging conditions in the current economy and are being put under further pressure by the rise of large supermarkets; notes that these businesses lie at the heart of their local communities, economically and socially; further notes that 13 EU Member States, including the Republic of Ireland, have introduced a reduced rate of VAT within their tourism and hospitality sectors for hotels, restaurants and pubs and that such measures have had a positive impact; calls on the Chancellor of the Exchequer to introduce similar sector-specific VAT reduction measures to help businesses in the UK; and further recognises that such a move would encourage growth in the wider economy, support job creation and generate investment in local businesses.
The EDM has been signed by 10 MPs so far and is accessible here.