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MP asks government to give hotels and B&B's a VAT cut

June 19, 2013 10:36 AM

Tim in WestminsterSouth Lakes MP Tim Farron has asked treasury ministers to reduce the rate of VAT on charges for hotels and B&Bs. Tim thinks this tax cut could boost trade, create jobs and help our tourism sector compete with other European destinations.

Tim has asked the Treasury to bring tax rates into line with other European countries. While VAT rates on hotels and cultural attractions are set at the standard 20% in the UK, they are much lower in other EU destinations:

  • · Germany 7%
  • · France 7%
  • · Ireland 9%
  • · Spain 10%
  • · Italy 10%

This puts the UK and the Lake District at a competitive disadvantage. According to independent research, cutting VAT on tourism to 5% would create 80,000 jobs, many for the young and unemployed, and generate a surplus of £2.6 billion for the Treasury over 10 years.

A report by Professor Adam Blake, using the Government's own Computable General Equilibrium (CGE) model, concludes that cutting VAT on tourism 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".

Tim yesterday tabled a written question in the House of Commons. He asked the Chancellor of the Exchequer "if he will consider reducing the rate of VAT charged to hotels in the UK for the purposes of enabling them to run their businesses at similar levels of taxation to hotels in other EU countries?"

Tim has consistently called for more support for Cumbria's tourism industry and campaigned to promote the Lake District as a top tourist attraction in the UK.

Tim said: "Local hotels and B&Bs are the backbone of our economy and, with the recent changeable weather we've had, I think they need more help and support. Recently I helped secure funding to help advertise the Lake District and I continue to lobby to get the government to turn us into an 'attack brand' for UK tourism. However I think we can do even more. I would like the government to look at the impact of cutting VAT for the tourism industry because I think it could boost trade and support our local economy."