Ceredigion’s Welsh Liberal Democrat MP Mark Williams has held a debate in Parliament calling for a reduction in the rate of VAT in the tourism sector from 20% to 5%, so it can be bought into line with competitor destinations in the European Union.
This debate has come in the midst of Wales Tourism Week, and on the eve of the budget. New research commission by the campaign to Cut Tourism VAT, which Mark has supported for a number of years, has shown that despite the initial loss to the Treasury in revenue in the first two years, after five years this would generate a positive net value of £668 million for the Treasury, and over ten years that figure would reach £4,159 million.
The research also shows that these proposed changed to the VAT regime would create a £4 billion economic boost to the UK per year, £166 million of which would be in Wales. This would create almost 6000 jobs in Wales in the tourism sector directly, and 120,000 jobs across this UK, as well as many more jobs indirectly.
In the debate Mark Williams highlighted the areas from which the Treasury could expect to see this money being generated, such as higher turnover in the sector resulting in more taxes to the Treasury, increased income and national insurance payments generated by new jobs, and the multiplier effect of the addition taxes generated down the supply chain which would come from a growing tourism industry.
He also spoke about the impact this will have for the UK’s economy on an international level, which is important given the internationally competitive nature of the tourism sector. Since 2013 the number of visitors to the UK, including Wales, has been on an upward trajectory. Mr Williams welcomed this, stating that now we needed the Government make this change in our VAT system in order to cement this growth in the tourism sector.
Commenting following the debate, Mark Williams MP said:
“In Ceredigion alone, an area which has a very vibrant local tourism sector, this move in VAT could attract a huge £5.3 million a year, creating 166 jobs directly, and many more indirectly.
“I want people to go on their weekends away to Aberaeron and Aberystwyth, rather than Barcelona and Torremolinos, and I believe reducing the rate of VAT in the tourism sector is one of the ways in which we can persuade people to do this. It is a move which has worked well in many other European countries, including Ireland, where a temporary reduction in the rate of VAT on the tourism sector in 2011 has now become permanent, and 20,000 jobs have been created as a result.
“There is a lot of evidence, and a great many experts in favour of making this change, and a huge amount of support up and down the country. Indeed I can’t think of a single area of the UK which would not benefit from implementing this change.
“I hope that the Government will study the evidence, and I believe they should have no aversion to commissioning independent research on this proposal. I, and many others, are already convinced of the long term benefits of this in securing the future economic prosperity of all regions of the UK."