More UK tour operators have backed a campaign to cut the VAT on tourism after Ireland saw a ‘remarkable’ tourism turnaround once it reduced its own tax.
The Cut Tourism VAT campaign is putting pressure on the UK government to reduce VAT for holidays from 13.5% to 9% after Ireland saw its visitor numbers recently rise 6% compared to a higher VAT year last year.
The Emerald Isle has seen 1.77 million people visit between March and May this year with 726,000 of those from the UK. While the country has seen an increase in its flight operations recently, particularly connecting to the US, Cut Tourism VAT believes the tax reduction had also helped improve the numbers.
The UK has one of the highest VAT rates in Europe at 20%, which Cut Tourism VAT says is pushing operators out of the industry particularly hotels.
“The government’s decision to reduce VAT, albeit by a small percentage in July 2011, has provided a vital stimulus for hotels and guesthouses,” said Michael Vaughan, president of the Irish Hotels Federation.
The VAT costs particularly hit Northern Ireland, which struggles to compete with hotels south of the border although has seen the Air Passenger Duty (APD) reduced on long-haul flights.
Graham Wason, chairman of the Cut Tourism VAT campaign said: “These latest figures clearly show the positive impact that a reduced rate of tourism VAT can have on the economy. Whilst the UK tourism sector struggles under a 20% rate, the Republic of Ireland has taken advantage of a lower rate to increase its visitor numbers and new jobs. Hard-working British families have to look to get the most value from every holiday pound they spend, and the UK’s high tourism VAT encourages them to take a break abroad in Ireland, France or elsewhere in Europe.”
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