Tag Archives: vat

Eluned Parrott AM writes…Tourism tax reduction will boost economy and create jobs

Tourism is a major part of our economy, and one of the few industries which truly covers the whole of the UK. There isn’t a single Parliamentary seat which doesn’t benefit from tourism and it’s a sector with great potential for growth.

As Liberal Democrats I believe we should use the levers at our disposal to stimulate the economy and create opportunities for people to get on in life, no matter where they live. That is why, as a group of local parties from across the UK, we have brought this motion to conference. By reducing VAT to 5% for tourism businesses – bringing the UK into line with most of our European neighbours – we could do exactly that.

British tourism is at a competitive disadvantage, being perceived as an expensive holiday destination when compared to other EU countries. The impact of this on our tourism businesses is that it encourages UK customers to holiday abroad and deters visitors to the UK.

But price sensitivity in the tourism industry also acts in subtler ways. With UK hotels seen as more expensive than continental ones, visitors to Europe from the US and Far East spend less time here, ticking off the major sights in London and never stepping beyond the capitol. The higher upfront cost of staying here means that businesses in other parts of the UK don’t benefit, and those visitors that do come spend less in restaurants, shops and visitor attractions because they simply aren’t here very long.

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Conference Countdown 2015: Cutting VAT for tourism would be a costly mistake

In the run-up to Autumn Conference in Bournemouth, we’ll be looking ahead to examine the highlights in the debating hall, the fringe and training rooms. You can find the papers here. You can find all the posts in the series here.

One of the motions at conference is for reducing VAT on tourism as far as possible. Here’s why that’s a bad idea.

The idea is to reduce VAT on hotels and selected attractions from the standard rate of 20% to 5% – the minimum allowed by the EU. This is something the British Hospitality Association has been lobbying the Treasury on for years. The motion refers to the importance of tourism more generally, with figures that include all restaurants, pubs and outbound flights, amongst other things, but I assume its VAT proposal is (mercifully) more limited.

The government’s response to this lobbying (under both Labour and the Coalition of which we were a part) has been to point to the substantial price tag. The cost of cutting VAT for accommodation alone would be £2 billion a year, with amusement parks and similar adding another £200 million. This is serious money. A comparable total would be the cost of the Pupil Premium that Lib Dems fought so hard to introduce.

Posted in Conference, Events and News | Also tagged , and | 22 Comments

The Sun calls for a VAT cut on UK holidays

stephen gilbertAfter the energetic debate in these columns over the photo of Nick Clegg holding the free World Cup edition of the Sun, it is, shall we say, interesting to be able to report a Lib Dem MP praising that newspaper for a campaign it is running.

Stephen Gilbert, the MP for St Austell & Newquay, in the holiday county of Cornwall, is quoted as supporting the Sun’s petition to cut VAT on holidays in the UK. He says:

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George Lyon MEP writes…Brave mountain rescue teams should not have to pay VAT on essential, lifesaving kit

We were navigating in near zero visibility in a white-out.

As I was navigating I put my foot out and onto nothing, and fell down about 800ft of sheer cliff.

You figure you have had it.

These are the words of 25 year old Scot Ollie Daniel, who plunged through snow while walking in the Cairngorms in January this year.

In Scotland we are lucky to have some of the most dramatic mountain scenery in the world. Walkers and climbers are a common sight in the Highlands and Islands all year round. But we know that these activities are not without risk.

Ollie was rescued …

Posted in Europe / International and Op-eds | Also tagged , , and | 5 Comments

Opinion: In defence of consumption taxes

MoneyWhenever the “cost of living” comes up as a topic, we often hear lists of consumption taxes that can be reduced to lower it. Most recently have been the green levies on energy bills; last year a big deal was made about fuel duty; the year before it was the top rate of VAT.  Some people even argue that taxes on cigarettes and alcohol hit the poorest and should be cut back.

I’m certain that there’s all sorts of taxes that we’d like to lower, but there’s no such thing as a free lunch, and any tax we lower requires us to raise another tax or cut spending elsewhere. Wealth taxes, and even a high rate of land value tax, would only raise so much, so if we’re to cut tax then we’re going to have prioritise.

My position is: whichever consumption tax you’d like to reduce, we’d be better off using the revenue to raise the Income Tax and Employee NI thresholds. This is for three reasons:

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Ed Balls shifts Labour’s position closer to the Lib Dems: is this the start of a Lib-Lab realignment?

Ed Balls and Vince CableEd Balls’ speech to Thomson Reuters yesterday grabbed headlines for its concession that paying a winter fuel allowance to the wealthiest 5% of pensioners could no longer be justified. The likely saving — at c.£100m a year, no more than a rounding error in the national accounts – may be modest, but the symbolism is significant.

This is Labour accepting (at long last) the new normal of austerity: current departmental spending will continue to be reduced in the next few years even as the long-hoped-for economic …

Posted in News and Op-eds | Also tagged , , and | 27 Comments

Labour’s VAT cut: bad economics and disingenuous politics

In the run-up to today’s county council elections, Ed Miliband has been taking to a wooden pallet in towns and villages around the UK, telling anybody who would listen about Labour’s plan to rescue the British economy by temporarily reversing the 2.5 percentage point increase in the rate of VAT.

Desperate, though, to avoid admitting this would involve a significant increase in borrowing, he’s been telling us that this would actually be a free tax cut because the economic growth that resulted from it would increase revenues by more than the upfront cost.

That unlikely-sounding claim was given short shrift by …

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