Written question asked by Adrian Sanders (Liberal Democrat) on Tuesday, 24 November 2009, in the House of Commons. It was due for an answer on Thursday, 26 November 2009. It was answered by Stephen Timms (Labour) on Monday, 30 November 2009 on behalf of the Treasury.

VAT: Tourism

Question: To ask the Chancellor of the Exchequer if he will assess the effect on (a) the UK economy and (b) the UK tourist industry of reducing value added tax for businesses in the tourist industry to 7 per cent.

Answer: VAT is a broad-based tax on consumer expenditure and reliefs from it have always been strictly limited. EU VAT agreements signed by successive Governments do permit Member States to introduce a number of reduced rates of not less than 5 per cent. on a prescribed list of goods and services. This list does not allow the application of a blanket reduced rate to all tourism-related activities.The Government keep all taxes under review. Where reduced rates are available, these have only been applied where they provide the most cost-effective and well-targeted support for the Government's policy objectives compared to other measures.Central Government have allocated over £130 million between 2008-09 and 2010-11 to VisitBritain and VisitEngland. However, that is only one aspect of public funding support for UK tourism. The contributions from the Scottish Executive, the Welsh Assembly, the Regional Development Agencies, and local authorities also need to be taken into account.

Secondary information