Study pushes case for retained VAT reduction
A group of hospitality and tourism bodies have today (4 February) published a study which highlights the benefits the UK government could accrue over a decade if the current reduced level of VAT is retained.
The report – produced collaboratively between the British Beer and Pub Association, UKHospitality and the Association of Leading Visitor Attractions – reveals that a permanent rate of 12.5% will bring VAT on hospitality and attractions in line with the European average (at 20%, it is nearly double), catalysing a cycle of industry investment and growth, which researchers claim will help to 'level-up' UK regions.
Other benefits researchers cite for the hospitality and tourism sector include:
- Creating 286,850 jobs over 10 years
- Generating £7.7bn of additional turnover over a decade
- Delivering £4.6bn in net present value of fiscal gains to the HM treasury over 10 years
- Returning a positive gain on the government's investment in less than five years
Report authors say the study presents a compelling case for implementing the lower VAT rate long-term. Industry bodies have urged the government to consider the findings at a time when the hospitality and tourism sectors are facing increased levels of debt as well as heightened costs across the board – from energy to raw materials, as well as supply chain issues and rising inflation.
A spokesperson for the industry coalition comments: "We must now reignite our industry with a long-term approach and vision to our sector recovery.
"The report we publish today sets out the undeniable case for making permanent the 12.5% rate of VAT. The tourism and hospitality sectors can truly act as an engine for the UK's recovery as we look beyond the pandemic.
"As we approach the point in April where the reduced rate comes to an end, we are united in calling on the government to change course and cancel the planned increase. The economic and societal benefits of making this change would be enormous."
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