Tourist tax proposals ‘nonsensical’ as industry awaits Northern Ireland VAT review

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As Scotland and Liverpool consider more ways to implement a tourism tax in the form of a nightly charge, the Campaign to Cut Tourism VAT has warned against further decreasing the competitiveness of Britain’s tourism industry.

 

Politicians in Scotland and Liverpool are urging their respective governments to devolve the power to implement a nightly tourism levy to local councils, a move the Campaign to Cut Tourism VAT has dubbed “nonsensical”.

In the north west, Liverpool City Region metro mayor Steve Rotheram said the city could be a “test bed for the rest of the country”, with a city council scrutiny committee report saying that hotels,retail and restaurants received the benefits of culture but were not obligated to fund it.

The report added that Liverpool should also support other cities such as Birmingham, which is currently lobbying for local levies to support the Commonwealth Games in 2022.

Rotheram concluded that he wants to“use the opportunity of devolution” to“capitalise on brand Liverpool”.

Responding, UKHospitality argued that this “capitalisation” would come primarily from the pockets of lower and middle income tourists, many of whom choose to staycation in Britain due to costs.The Campaign to Cut Tourism VAT called it “nonsensical”.

“This fundamentally regressive form of taxation will increase prices across the board for visitors and discourage longer stays that provide greater benefit for the local economy than day visitors,” a spokesperson for the campaign said.

“For every £1 spent directly in the hospitality and tourism industry, on average, a further 50p is spent in the local economy, and threatening the already great contribution of the industry to local areas is nonsensical.

“To countenance an increase in taxes on tourism businesses when the rate of VAT on tourism remains one of the highest in Europe is inconceivable.”

In Scotland, however, there is a similar story, with Scottish Labour urging Holyrood to take steps to introduce a tourist tax. Monica Lennon MSP wrote to Communities Minister Angela Constance, calling on her to give local councils the power to take a piece of the country’s “flourishing” tourism industry.

“I believe councils, who understand their local industry and area, should have the choice to ask visitors for a bit more to make sure local services are properly funded,” Lennon wrote.

“Glasgow and Edinburgh airports both declared 2017 a record year for passenger numbers and the latest VisitScotland statistics show that in the first nine months of 2017, international tourist trips to Scotland increased by 14.6 percent to 1.26 million. It is clear that Scotland’s tourist industry is flourishing, which is brilliant to see. We must now start giving back to the communities that have made it such a success.”

Unfortunately, many councils and politicians do not understand their local area.While Lennon praised Glasgow airport, RyanAir were pulling out due the country’s air passenger duty rate (APD).

The company’s chief commercial officer David O’Brien said the airline’s initial decision to launch a base in Glasgow was predicated on promises by the Scottish Government to cut or abolish APD, but that authorities “have not done so”.

In the background of these various attempts to tax tourism further, the Campaign to Cut Tourism VAT is continuing to lobby for a reduction to Britain’s 20 percent tourism VAT rate.

There is currently a review into the impact of Tourism VAT and APD in Northern Ireland, which has a particularly vulnerable tourism industry due to the land border shared with the Republic of Ireland, which enjoys a tourism VAT rate of nine percent.

The campaign expects for the outcome of this to be released shortly.


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