Industry would support a tourist levy if VAT cut

Ian Taylor

UK industry leaders are working on proposals that could lead to the sector puting its weight behind demands for local authority taxes on tourists in return for a cut in VAT on hotel stays. But they want VAT and

local tourist taxes to apply to all accommodation providers including Airbnb-type rentals. Te Tourism Alliance, an umbrella

group that unites the outbound, inbound and domestic sectors and includes Abta, is draſting proposals for local authorities to tax visitors in return for a reduction in the 20% VAT rate on accommodation to a level in line with other destinations in Europe. France, Spain and Italy levy VAT on hotel stays at 10%, Germany at 7%, and Belgium and the Netherlands at 6%. Tourism Alliance director

Kurt Janson told Travel Weekly: “If the government reduced VAT on accommodation to 10% then added a 5% tourist tax, customers and destinations would both win.” Te Tourism Alliance proposes

the Treasury make up the lost VAT revenue by reducing the current VAT threshold, which excludes accommodation providers earning less than £86,000 a year. Janson said: “Te government

could make up the shortfall by lowering the threshold for the accommodation sector to £5,000. It would pull everyone into paying VAT, [including] if you’re renting out a place full-time on Airbnb.” He argued Brexit would allow

greater flexibility in how Britain applies VAT, pointing out: “In the EU, there has to be an industry-wide threshold. Outside the EU, we would have the ability to be inventive. “We’re puting together the

Kurt Janson

argument [for this] with UKhospitality and the B&B Association.” Janson also called for a proportion

of the existing taxes on tourists, such as Air Passenger Duty, to be channelled to local authorities. He told a Westminster forum policy conference on UK tourism last week: “Councils see no revenue [from tourism] and have no money, which is why there are all these calls for tourism taxes.”

Inbound tourism chief calls for rise in board funding

UK inbound tourism has grown but “there is no room for complacency”, UKinbound association chief executive Joss Croſt told a Westminster forum on UK tourism last week. Croſt said: “Te sector looks

rosy from the outside. Tourism has grown while other industries have suffered – 2017 was a record year, 2018 saw a slight drop, 2019 is forecast to grow again.” However, he said: “[Visitor]

spending decreased 7% in 2018 when worldwide tourism spending increased. Our competitors are geting more aggressive. Some Indian states spend more on tourism promotion than Britain. “We have a plethora of markets

and VisitBritain needs a presence [in them]. [Yet] government pressure on public funding is greater than ever. Many politicians will tell you tourism just happens. “Tere is no room for

complacency. Our national tourist board must be supported.”

City councils’ enthusiasm for tourist tax grows

An all-party group of MPs has backed calls for a cut in the “tax burden” on UK tourism suppliers “to mitigate industry opposition to a tourist tax” or ‘transient visitor levy’. Te report by the All-Party

Parliamentary Group for Hospitality, published at the end of May, notes “increasing enthusiasm” from local councils wishing to follow “major


in every £1” from central government since 2010 and face a funding gap of £8 billion by 2025. Edinburgh council voted to

cities in Europe” by levying taxes on tourists.

Te MPs point out a tourist tax

“would enable local governments to support the tourist economy” when they have lost “the equivalent of 60p

introduce a tourist tax in February, citing “increased demand on public services, city congestion, pressure on waste and cleansing services”. Te Scotish government has promised legislation to allow this, although a tax is unlikely to be introduced before 2021. A survey in Edinburgh found

overwhelming support among residents and suggested 88% of visitors would still come, although business groups challenged the findings.

Birmingham proposes a tourist levy

to part fund its hosting of the 2022 Commonwealth Games. Te Welsh government has considered a tax, as have Bath, Liverpool and Cumbria councils. Mayor of London Sadiq Khan advocates a tax, as do several London councils including Westminster, while the London Finance Commission recommended a levy in 2017. Te MPs conclude that “the

rationale” for a tax “is sound”. But they note “significant opposition from within the industry” and report: “It’s unlikely the sector’s view will change without addressing the wider tax burden.”

27 JUNE 2019 71

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