Andrew Teacher: Osborne fails to see big picture on tourism tax

GEORGE Osborne wants everyone to believe that he is investing in Britain’s future. The Chancellor wants voters to think the Conservatives are looking at the long term and not just quick measures to shore up votes.

Yet, together with his Treasury henchman David Gauke, Mr Osborne has repeatedly refused to even discuss cutting VAT on hotels and attractions.

The carbon copy letters sent by the Treasury to over 100 politicians supporting the campaign say that reducing VAT from 20 per cent to five per cent would cost too much.

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Yet, the dodgy numbers given out by the Treasury – which initially claimed a VAT cut wasn’t possible – only refer to the amount of VAT they would obviously lose in the first year.Surely any competent Treasury official should look at the bigger picture – the long-term benefits – and include the full spectrum of taxes coming in and out?

This week, we published figures released showing slashing VAT on tourism would create over 8,500 jobs in Yorkshire and inject some £260 million into its regional economy. Across the UK, the jobs boost would be over 120,000. Many of these jobs would also fall at the feet of younger people. You would think that politicians would jump at such an opportunity to invest in Britain’s future.

That helping tourism will help Yorkshire should be of no surprise to anyone who knows this area well. Our humble county is able to boast over 800 attractions to visit, including two World Heritage sites, as well as countless places to stay, ranging from world-class hotels to small family-run B&Bs.

Research carried out using the Treasury’s own economic model shows reducing VAT on tourism to five per cent would also boost GDP by £4bn each year, and contribute £4bn in tax revenue over 10 years. Bungling Treasury officials – who suggested using the complex calculation system – have since tried to bury these figures because the result was a lot more positive than they had hoped. The official Treasury line has maintained that a VAT cut would cost too much. Funnily enough, I don’t remember George Osborne saying that when he cut corporation tax to one of the lowest levels in the Western world.

Britain remains one of the most expensive destinations to holiday in the world, ranking 138th out of 140 for price competitiveness by the Travel and Tourism Index. While Mr Osborne and his Cabinet colleagues holiday in luxurious country piles or on lavish foreign beaches, the rest of the country is not as attractive to tourists as you’d think.

Many big tourism businesses – like Butlins, Legoland and Alton Towers who back the campaign – have done well. But they could be doing so much better.

For many visitors, hopping on a plane at one of London’s many nearby airports and flying to Europe is cheaper than ever. We’ve cut aviation duty and so are incentivising people to leave this country and spend their cash elsewhere. In many EU countries, a hotel room or theme park is seen as better value smply because these businesses don’t have the burden of VAT hanging round their necks.

If we reversed this, then taking a train or coach to Yorkshire becomes a far more attractive proposition.

The campaign has doubled its political support since the 
start of summer and thanks, in no small part, to the efforts of The Yorkshire Post in highlighting the opportunities here.

It’s a great shame that Mr Osborne and David Cameron still refuse to engage. But as we’re seeing the rise of Ukip in many coastal areas, they may yet get their comeuppance.

But Yorkshire deserves better. Its seven cities, six national museums, five Michelin-starred restaurants and three national parks, should be at the top of the itinerary for any traveller.

With unfair VAT holding the arms of hard-working businesses behind their backs, this success risks being snuffed out. And it’s not just international tourists who are being put off.

Brits too face the same choice between a cheap holiday abroad and expensive one at home.

Right now, the Government is encouraging tourists to stay away and Brits to fly away. This is ridiculous. It also means David Cameron is failing on two promises he made at the start of his premiership – to boost tourism, and to boost exports.

Tourism and exports rarely go together in people’s heads. That’s because if you see either the Prime Minister or Chancellor on TV talking about the yawning trade deficit, they’re usually outside a car factory in a hi-vis jacket and hard hat.

But every time someone from abroad stays in a British hotel, or visits a British theme park, they are paying for a British good and a British service.

Tourism is in fact Britain’s sixth largest export, worth £24bn annually and supporting over three million jobs across the UK. But it is also the only export subject to VAT. With Britain’s ongoing imbalance-of-payments, we have to ask ourselves why the government is penalising one of our top exporters.

So as we make our way towards the next General Election, I’d encourage all readers of The Yorkshire Post to visit push their MPs to ensure cutting tourism VAT is a part of their election manifestos.

• Andrew Teacher is a spokesman for Cut Tourism VAT campaign.