Mike Hancock News
MP's message to Chancellor - Use budget to boost British Tourism jobs
Mike Hancock is urging the Chancellor to act in his budget next week to boost tourism to this country. He wants the Government to cut VAT on tourist attractions to enable them to compete more effectively with their European rivals which have lower taxes levied on them. The MP says that research shows that the measure would actually increase tax receipts by £600 million over the longer term and create 23,000 badly needed jobs. Many tourist attractions and hotels in countries such as France and Germany only have VAT at 5% or 7% while their rivals in this country have to pay getting on for three times that at 17.5%. Mike says that the Chancellor could use the better than expected Government borrowing figures to invest in cutting VAT which pay dividends later on. Mike Hancock has written to the Chancellor and supported a parliamentary motion on this.
Mike Hancock said: "Obviously the higher rate of VAT for British tourism businesses is going to have a major impact on their competitiveness. With the global recession, tourists are going to look very carefully at where to visit. And if we are not able to offer value for money in this country because we have higher taxes, visitors are going to go elsewhere. This is particularly important for Portsmouth which greatly depends on attracting visitors from both abroad and this country."
The Lib Dems have also said that the threshold for people to start paying income tax should be increased to £10,000. This would save the average earner £700 a year. They would pay for it through a "mansion tax" of 1% on properties worth more £2 million and cutting tax loopholes for the very wealthy.
Mike Hancock said: "The Chancellor should use the budget next week to make things fairer. Both for individuals by increasing the personal allowance to £10,000 and for businesses - especially smaller business and making business in the tourist and visitor sector more competitive with their international rivals."
Notes: Mike has supported EDM 217: "VALUE ADDED TAX AND TOURISM" which can be accessed at http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=39757&SESSION=903 and Mike's letter is enclosed with this news release.
Rt Hon Alistair Darling
Chancellor of the Exchequer
HM Treasury
1, Horseguards Road
LONDON SW1A 2HQ
OUR REF: MA/TOURISM
18 March 2010
Dear Chancellor
I am writing to you ahead of the budget next week to urge you to look seriously at one measure - that is to look at reducing the VAT on tourist venues including hotels and other visitor attractions from 17.5% to 5.5%.
This should be a tax cut that even a Chancellor of the Exchequer should be in favour as research shows that it would create an extra 23,000 new jobs and additional tax revenue of £600 million a year and assist the economic recovery. Obviously tourism is a very competitive international market. People from abroad will be deciding whether to come to Britain or other countries, particularly European ones. But British businesses in the tourist sector have a competitive disadvantage in that many of their rivals in other countries have much lower rates of VAT. For example Germany has cut VAT on hotel accommodation to seven per cent while France has cut VAT on restaurant food to five per cent.
I understand that public borrowing is a bit better than predicted. This would enable you to reduce VAT on the tourist sector. While there may be an initial drop in VAT receipts, as I say the research shows that this would be more than made up for by future gains so I suggest would be a good use of any spare money that is available to you. I hope therefore you will consider doing this in your budget.
Best wishes
Yours sincerely
MIKE HANCOCK CBE MP
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