Economy: Ministers reject call for tourism VAT cut

MINISTERS have rejected calls to give tourism businesses a VAT cut to help create thousands of jobs and boost the economic recovery.

Despite dozens of MPs calling for tourism firms such as hotels and visitor attractions to be given a tax cut the Government says there is no reason those businesses should get special treatment.

France and Germany offered cuts to hotel accommodation and restaurant food in a bid to stimulate growth during the recession but Tourism Minister John Penrose said the budget deficit meant offering tax cuts was "extremely difficult".

Pressed on the issue by MPs, he said: "The challenge the tourism industry needs to face up to is this: if it wants a better deal than any other sector of the economy, it needs to explain why it is more important than all the others, which will also be asking for a special deal on VAT and other taxes.

"That will include the miners, the banks, the IT sector and all other sectors of the economy. If that case can be made, I will be delighted to make representations to the Treasury - but not until then."

The Yorkshire Post reported last year how the Government was being urged to introduce the tax break, which could have boosted the region's 6bn-a-year tourism industry.

In the June budget, Chancellor George Osborne decided to raise VAT in January from the current 17.5 per cent to 20 per cent as part of a package of measures to bring in billions of pounds to tackle the deficit.

It follows a temporary cut in VAT to 15 per cent during the downturn to stimulate the economy.