MP calls for VAT reduction for tourism businesses

Mike Weir
Mike Weir

Angus MP Mike Weir has once again called upon the UK government to look at the example of the Vat reduction on tourism related businesses in Ireland to give a boost to the rural economy of Angus and Scotland.

Mr Weir, who has previously raised this issue on many occasions spoke in a debate on the issue in the House of Commons last week.

He said: “It is open to the UK government to have a lower rate of VAT on tourism-related businesses as, for example, has been done for hotel accommodation in 24 of the 28 other member states of the EU, including Germany, France and Spain.

“At present the UK’s rate of 20 per cent is exceeded only by Denmark and Lithuania, whilst Luxembourg has a rate of only three per cent and Portugal, a major tourist destination, six per cent.

“Ireland has gone further and introduced a nine per cent rate on all tourist-related businesses and services as opposed to the standard rate of 23 per cent. A recent report has shown that this has given a significant boost of around 40 million Euros to the economy and created 10,000 jobs.

“Tourism and related industries form an important element in the economy of Angus. Tourism provides 4.9 per cent of Scotland’s GDP and according to the Office of National Statistics almost 10 per cent of those in employment in Angus work in tourist related businesses. A reduction in VAT could give a valuable boost to the local economy. A rise in visitor numbers could also result in a boost for other local businesses in our towns.

“It is not cheap to holiday in Scotland and the standard rate of VAT puts many businesses at a significant disadvantage when competing with lower rates in other parts of Europe. Everyone is having to look at their spending at present, and a reduction in VAT could produce significant savings to the individual, encouraging them to spend money in Scotland rather than overseas while, at the same time, giving a boost to the Treasury as has happened in Ireland.

“We need to give our tourism industries a boost, a chance to fight back rather than asking them to fight with one hand tied behind their backs because of the UK government’s refusal to match changes in VAT in other EU countries.”

Mr Weir pointed out that the UK government itself had shown it was possible to have a lower rate on some tourist related businesses by reducing the rate on ski lifts in the 2012 budget.

Mr Weir added that he was disappointed, although not surprised, by Treasury’s dismissal of the idea.