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Government overlooks VAT reduction calls

18 | 07 | 13

The government has dismissed calls for VAT to be reduced in the hospitality industry. 

Several campaigns have been launched that argue the tax should be cut to help businesses in the sector and bring the UK in line with European nations such as France and Germany. 

The issue was raised in the House of Lords last week, with Lord Aberdare claiming a reduction in VAT for tourist sites and hotels would boost the tourism industry. However, Baroness Northover, who was representing the government, rejected the idea.

She stated: "The Treasury could not see a causal link between VAT rates and tourism levels, so I am afraid that the Treasury is thus far not persuaded."

This news is a blow for campaigners such as Jacques Borel, who has called for restaurant VAT to be reduced to similar levels to those in other European nations. He has established the Vat Club Jacques Borel to raise awareness of this issue and pressure the government into taking action. 

The organisation has said that if the tax - which currently stands at 20 per cent - is reduced, it will drive the creation of new jobs and businesses. It claimed 60 per cent of the money saved would be used to lower prices, while the remaining 40 per cent would fund higher wages for staff, training programmes and investment.

A number of prominent businesses have pledged their support to the Vat Club Jacques Borel, including JD Wetherspoon, Prezzo and Subway.

While the government's response to the call for a VAT cut is a setback for the group, the issue will resurface again in a few months as the organisation has arranged a Tax Parity Day, which will take place on September 25th.

This will see a number of restaurants and other venues voluntarily lower their prices by 7.5 per cent in a bid to demonstrate the benefits of VAT reduction.

Catering equipment firms will watch this development with interest, as if the tax is cut companies may become more willing to increase their spend on new kitchen products.ADNFCR-16001031-ID-801614261-ADNFCR

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