Caroline Lucas MP wants VAT cut and a year long financial package to resuscitate UK tourism and the hospitality sector. It’s a tax reduction call with a long track record, but in a post-Coronavirus world, the case has never been as strong.
Caroline Lucas, the Green Party MP representing Brighton Pavilion, has tabled two Early Day Motions calling for VAT on tourism to be cut to 5 percent as a mechanism to cut prices, encourage visitors, and allow businesses to increase investment and for a lifting of the £51,000 threshold for SMEs being eligible for the fund set up to support small businesses as it excludes many individually-run pubs.
The EDM, calling for a 12- month financial support package to secure the survival of the UK tourism and hospitality industry until the summer of 2021, stated: “That this house notes that hospitality and the UK tourism industry are among the hardest hit by the necessary social distancing policies in place during the covid-19 outbreak; it further notes that 80 per cent of workers in the hotel and food industries are furloughed and up to a third may be at risk in the longer term of losing their jobs; it recognises that in the Lake District 80 per cent of the working population are employed in tourism or hospitality; further recognises research from Cumbria Tourism indicating that the cost of coronavirus in Cumbria may reach £1.45 billion by May 2020, translating into 18,459 job losses; further notes that the seasonal nature of the tourism industry means that many businesses will not be able to generate the necessary level of income to avoid closing down after the support packages end.”
Giving a local constituency context to her calls, Lucas said: “Tourism and the hospitality industry are critical to our (Brighton’s) local economy, supporting around 21,000 jobs. The industry has been shut down by the necessary social distancing measures announced by the Government. It’s so distressing to see so many shuttered pubs, many of which may never re-open if they can’t access the grants set aside for small businesses. The hospitality industry will not fully recover by itself – there needs to be positive support from the Chancellor.”
Liberal Democrat MP Alistair Carmichael, who supported the motion as a sponsor, added: “Areas of the UK with distinctive and vibrant tourism offerings have been hit hard by the impact of coronavirus. Government measures should reflect this reality and the seasonal nature of the industry. We know that a short-term financial fix will not be sufficient for companies and self-employed people who rely on the summer trade to see them through the rest of the year. Even as restrictions begin to be lifted, travel and tourism will be some of the slowest industries to return to normal and so what may work for other sectors simply will not work here. If the government wants this industry to recover as strongly as possible then they should provide the incentives to do so.”
Cut Tourism VAT is campaigning for the rate of Tourism VAT to be brought into line with competitor destinations within the European Union. British families or international visitors choosing a British holiday are liable to pay almost three times as much VAT compared to a German break, and twice as much as one in Italy, France and Spain. The Cut Tourism VAT campaign, claims independent research carried out by a Treasury adviser using the government’s own economic model has shown that lowering the rate of tourism VAT to 5 percent is one of the most efficient, if not the most efficient, means of generating GDP gains at low cost to the Exchequer. Additional research by Deloitte/Tourism Respect found that such a reduction would contribute an extra £4.6 billion to HM Treasury over ten years and create 121,000 jobs.