Most of the savings from a VAT cut on tourist attractions would be passed on to customers if a lobby to reduce it was successful, a campaign boss has said.
Cut Tourism VAT is calling for the current value added tax rate of 20% to be slashed to 5%, which it claims would boost the economy and create jobs.
Campaign chairman Graham Wason told Ride Rater that similar cuts made in other European countries have for the most part been passed on to customers.
“The evidence from case studies in 17 countries and regions where the rate of VAT on tourism has been reduced demonstrates that most or all of the cut will be passed on in the form of lower prices,” he said.
“Furthermore, a major study carried out for the EU by Copenhagen Economics concluded that ‘the empirical evidence from major changes in VAT rates supports the conclusion that changes of VAT rates to a very large extent are passed on to consumers.”
‘Investment in new rides’
The campaign has commissioned research into the likely impact of a reduced rate of VAT on UK attractions and accommodation.
Mr Wason said: “This research prudently assumes that only 60% of the VAT cut is passed on in the form of lower prices.
“The remaining 40% is distributed to investment in new rides and other product improvements, increases to staff wages and training and improved profitability.
“All of these contribute towards increasing the competitiveness of UK attractions compared to those overseas.
“A VAT reduction will make a visit more attractive to domestic and foreign guests alike. This in turn will create a virtuous circle through increased revenue.”
Despite the campaign’s claims of the measure generating 80,000 jobs in tourism, the calls for the rate cut have so far been largely rebuffed by the British government.