Hope dashed of a cut on VAT rates for tourism

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Hopes of slashing VAT for the tourism industry – a move which would boost businesses across Blackpool – look set to be dashed after ministers said the move was unaffordable.

Neither of Blackpool’s MPs attended a debate in Westminster Hall this week to consider calls to slash VAT from 20 per cent to five per cent.

Gordon Marsden and Paul Maynard said they did not attend because the debate was not in the main chamber and there was no vote.

But MPs from other tourist regions including Brighton, Eastbourne and the Lake District did quiz Treasury minister David Gauke.

It was the first time the campaign, which is backed by hoteliers in Blackpool, has been discussed in Parliament.

Mr Marsden said: “It is good this was on the agenda but there was never going to be a vote. What is important is not just one debate, but a continuous campaign to put pressure on Government to support tourism.

“The Government needs to look at other ways of supporting the tourism industry and that includes raising the VAT threshold which would benefit more businesses in Blackpool, as would a lower rate of VAT on repairs and renewals.”

Mr Maynard said the debate had been instigated by campaigners who are calling for a VAT cut on admission prices to attractions and accommodation, whereas he supported widening the cut to restaurant food.

He said: “It was only a Westminster Hall debate and was not in the main chamber, however I will be reading the Treasury response.

“I remain supportive of the objectives of reducing VAT across the entire tourism sector and will be writing again to Treasury ministers to explore in greater detail their objections.

“We need to allow our tourism sector to develop and I believe the 20 per cent VAT rate discourages innovation and investment.”

Campaigners, including Blackpool hoteliers and attractions operator Merlin, are calling for VAT to be reduced.

The Gazette also launched a campaign ‘Slash the VAT’ in support of the calls in 2012.

But Mr Gauke told the debate said: “Funding the cut by additional borrowing would be contrary to our long-term economic plan to get the deficit down and put our public finances in a credible position.

“It would entail a risk to the recovery.”

He said the Government was supporting tourism in other ways including a campaign to encourage domestic tourism.

Shadow Treasury minister Shabana Mahmood said Labour was also unable to agree to a VAT cut for tourism because “we must ensure the sums add up.”

She said: “Although I cannot commit to the VAT cut that the campaign calls for, I can commit to engaging in the conversation and working to examine what else we can do to support the industry and to ensure it plays its full part in getting us towards sustained economic growth.”

Supporters of the VAT cut have argued the move would bring the UK in line with other EU countries such as France and Germany, and help create around 80,000 new jobs in the UK.

They said although there would be an initial revenue loss to the Treasury, this would be compensated for by increased taxes and a reduction in benefits payments because more people would be in work.

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