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David Cameron overlooks hospitality VAT reduction calls

20 | 08 | 13

The prime minister has dismissed calls for VAT to be cut in the hospitality sector. 

A number of campaigns concerning this issue have been launched in recent months, claiming a reduction in the tax would boost the industry and the economy as a whole by encouraging more people to eat out and increase the number of tourists who visit the UK. 

However, David Cameron does not believe this is necessary. Speaking as part of a question and answer session on Global Radio in Manchester, he claimed a range of sectors can make a case for having their VAT cut, but said reducing the tax is not the answer for the hospitality industry. 

The prime minister suggested a better way to boost the sector's fortunes would be to make the most of the weak pound.

"We've seen the levels of our currency have gone down as we've had these economic difficulties, so it is cheaper to come to Britain," he stated. 

"Crucially when people come to Britain, we have to get them to come outside London and visit places like Manchester. So there is lots we can do to encourage people to come to Britain without cutting VAT, which would be expensive."

Mr Cameron's comments have drawn criticism from Graham Watson, chairman of the Cut Tourism VAT campaign.

He argued it is not true that other sectors make a good case for having their VAT cut and claimed the hospitality industry would benefit most from a reduction.

Mr Watson added it is "surprising" the prime minister cited the weak pound as a way to encourage tourism, as this makes no difference to British consumers and is not a sustainable policy. 

The issue of VAT in the hospitality sector will come to the fore next month as the VAT Club will be hosting Tax Parity Day on September 25th. This event will see a number of restaurants, pubs and other venues voluntarily lower prices by 7.5 per cent for one day only to demonstrate the benefits a tax reduction would bring and catering equipment firms will surely be watching with interest.ADNFCR-16001031-ID-801627417-ADNFCR

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