Waveney MP Peter Aldous has this week pledged his support for a campaign to cut the rate of Value Added Tax on tourism from 20% to 5% in order to boost the hospitality industry.

 

Peter believes that a VAT reduction in restaurants, pubs, bars and hotels would be in the wider interest, helping to create jobs and promote economic growth.

 

Experts have predicted that cutting VAT on tourism, such as overnight stays in hotels and admission charges, would result in more jobs being created and would lead to an increase in the tax yield.

At present, there is a significant disparity between the zero rate of VAT on food and beverage sales in supermarkets and the 20% VAT rate for sales in pubs and restaurants.  A reduction to 5% would bring the UK in line with 13 other EU member states.

 

Many of the sector's workers are young people (18-24) who might otherwise have limited job prospects. It is estimated that up to 670,000 additional jobs could be created in new and existing businesses within three years, and that a VAT reduction would be close to self-financing because of the gains that the Treasury would secure from national insurance, savings in benefit payments, higher income and corporation tax receipts and a wider taxation base.

 

The VAT Club Jacques Borel staged a Tax Parity Day last September showing that the sector is very price sensitive, and therefore lower VAT rates and lower prices will stimulate significantly higher sales and jobs in a highly labour-intensive sector. The second day of action Tax Equality Day scheduled for Wednesday 24th September 2014 when it is hoped that over 15,000 venues will participate.

 

Aldous commented:

 

"I am pressing the Government to bring down VAT for the hospitality industry to 5% in order to enable the sector to compete on a more level playing field. It would help sustain local communities and regenerate town centres, such as in Lowestoft, Beccles and Bungay."