Scots tourism minister welcomes agreement on VAT study

The UK’s devolved governments have repeated pleas for the Treasury to cut VAT to boost the tourism industry.

Scotland’s tourism Minister Fergus Ewing welcomed a step forward in assessing the impact of VAT in tourism after a meeting in London with representatives from the UK’s four tourism departments who jointly agreed to ask the Treasury to commission further research into a VAT cut for tourism businesses to allow them to better compete with other European countries.

Powers over VAT are currently reserved to the UK Government.

Mr Ewing said: “Of 28 European Union countries, 25 have reduced tourism VAT, with only Denmark and Slovenia having higher VAT rates than the UK - where the rate is currently 20 per cent.

“Today, we discussed the particular case of the Republic of Ireland, which temporarily reduced VAT on tourism from 13.5 to 9 per cent in May 2011, but has kept the cut in place because of the benefits its tourism industry has enjoyed as a result.

“We believe that reduced VAT for tourism businesses may have brought important benefits for some states, but more needs to be done to collate hard evidence on the subject.

“That is why the UK, Scottish, Welsh and Northern Irish Tourism ministers have agreed to ask the Treasury to undertake a study on a reduction in VAT and its potential to support the tourism industry.

“With the vast majority of European countries administering lower VAT rates for tourism businesses, and reportedly seeing considerable benefits, the need to look again at this important issue is compelling.”