Weir calls for treasury action on vat to assist tourist industry

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Angus MP Mike Weir has called upon the UK Treasury to take action to reduce VAT on tourism related businesses which could give a significant boost to the local economy of Angus and to the Scottish economy.

Mr Weir cited the research carried out by Professor Blake, Deputy Director of the International Centre for Tourism and Hospitality Research, which showed that a reduction in VAT would lead to a boost in the economy and create many new jobs.

Commenting on the matter Mr Weir said: “Tourist related businesses are a vital part of the local economy and of Scotland as a whole. The industry contributes around 5.8 per cent of Scottish GDP and creates many jobs, particularly in rural and seaside areas.”

“At this time of year as many people are looking at booking their summer holidays the reduction in costs could encourage a significant number of people to holiday in Scotland rather than head overseas, giving a boost both to local businesses and the general economy.”

“At present Tourism pays the standard rate of 20 per cent VAT which puts it at a distinct disadvantage to our European competitors which have far lower VAT rates for such businesses.

“Ireland, for example, has a rate of 9 per cent against a standard rate of 23 per cent.

“Most other major European countries have a VAT rate on tourism business of less than half of that levied in the UK.

“This means that the UK is a very expensive destination both for overseas visitors and for those who are considering whether to holiday at home or go overseas.”

“Such a variation of VAT is permissible as tourism services are one of the few areas on which reduced VAT can be levied in terms of European legislation.”

Mr Weir added that Professor Blake’s research used the Treasury’s own model and showed that such a reduction could boost the economy.

“The fall in VAT receipts would be offset by increased activity and increased employment. The model suggests that throughout the UK 78,000 jobs could be created. Clearly many of these jobs would be in more rural areas, such as Angus.”

“This is a win win situation for the Treasury and they should take action as a matter of urgency to give a much needed boost to the economy.”