Carmichael calls for tourism VAT cut to be made longterm

Following the announcement today of a 15 per cent cut on VAT for tourism and hospitality, Northern Isles MP, Alistair Carmichael has called for this change to be made longterm — or even permanently.

Mr Carmichael, who has campaigned for years for a reduced rate on tourism VAT as a way to support local jobs and growth, has asked for there to be a 12-month package of support. He hopes that this will ensure that the visitor economy can recover with confidence from the impact of coronavirus.

Speaking in the House, Mr Carmichael said: “Having campaigned for many years for a five per cent rate of VAT for the visitor economy can I welcome that part of the chancellor’s announcement today. Can I ask him though not to close the door on the idea of extending or making that permanent?

“He will have the best data now to test against previous studies that show that that rate could bring a better return of revenue for the Treasury. I fear that in my constituency where we have a highly seasonal economy, many of the businesses won’t benefit from it because they are not intending to reopen again until next spring.”

Responding, the UK chancellor, Rishi Sunak, said: “I know that this will make a big difference, it is important though that this is time limited. That is in keeping with other countries that have done something similar. I will happily bear all future tax suggestions but in the short term I hope that his constituencies get the boost in confidence that they will need.”

Following the exchange, Mr Carmichael said: “The chancellor should reconsider extending the VAT cut beyond January. Short term incentives, while welcome, will not help those businesses that will not re-open until next spring. I will work with tourism and hospitality bodies in the coming weeks and months to make this point to the government.

“We need a longer-term vision for the economy, including for those businesses and workers still left out of support. Without a 12-month package of support measures we risk merely delaying the harm to our economy and to people’s lives.”