David Cameron acknowledges argument for cut in tourism VAT

David Cameron has refused to rule out a reduction in value-added tax for leisure and hospitality-related purchases after acknowledging that campaigners had made a “very good argument”.

The Prime Minister was told that Britain could increase its competitiveness as a tourist destination by cutting VAT from 20 per cent to five per cent.

Research from the Cut Tourism VAT campaign highlights that Britain is one of only four countries in the EU to charge VAT on tourism at 20 per cent. Cuttourismvat.co.uk says that by charging 15 per cent less, Mr Cameron could create 80,000 jobs and generate a surplus of £2.6 billion for the treasury over the next decade.

This would be generated through extra income from both regular and business tourism. For example, more companies could be inclined to book out event spaces in the UK if hotel rates are brought down.

Commenting on the claims, Mr Cameron said this was a “difficult” situation to address as the new VAT rate was brought in to deal with the budget deficit.

However, he stressed there was always good cases for cutting VAT, much like the one put forward by Cut Tourism VAT.

“The leisure industry and the hotel industry make a good argument but as do a lot of industries – people say to me why not cut VAT on repairing houses – so there are lots of arguments for cutting VAT,” said Mr Cameron, cited by morningadvertiser.co.uk.  

The Prime Minister added that campaigners have to come up with “very good” reasons for their ideas to be accepted.