Tourism: VAT

HM Treasury written question – answered on 28th March 2017.

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Photo of Peter Aldous Peter Aldous Conservative, Waveney

To ask Mr Chancellor of the Exchequer, pursuant to his oral contribution of 28 February 2017, Official Report, column 157, whether the £10 billion includes catering services; and what the corresponding figure would be for reduced VAT receipts directly attributable to accommodation and visitor attractions if VAT were reduced to five per cent on those items.

Photo of Peter Aldous Peter Aldous Conservative, Waveney

To ask Mr Chancellor of the Exchequer, what estimate his Department has made of the net fiscal effect of reducing VAT on accommodation and visitor attractions to five per cent taking into account of a potential increase in competitiveness and economic activity.

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury

The £10 billion annual cost of reducing VAT to five per cent on tourism covers accommodation, visitor attractions and restaurants. The cost of reducing VAT to five per cent on accommodation and visitor attractions alone is estimated at £3.1 billion annually.

The Government has carefully considered the evidence for applying a five per cent reduced rate of VAT on accommodation and visitor attractions and believes that the costs of doing so outweigh the benefits.

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