Farming News - VAT on tourism businesses should be cut to 5% to boost the economy post-COVID-19

VAT on tourism businesses should be cut to 5% to boost the economy post-COVID-19

13 May 2020
Frontdesk / Finance

VAT on tourism businesses should be cut to 5% to boost the economy post-COVID-19, says the Country Land and Business Association (CLA).

The call comes as the business group, which represents 30,000 rural businesses, releases a raft of new suggestions to get the rural economy moving.

CLA President Mark Bridgeman said:

“Rural tourism businesses will see revenues fall by up to £17.6bn this year.  It is right that, for the moment, people stay away and follow government guidelines.  When the restrictions are lifted we are encouraging everyone to book their family holiday in the beauty and safety of the British landscape. 

“We hope that people are looking forward to enjoying the tranquility and space that the rural and coastal areas have to offer and enjoy. There is nowhere better for a holiday than the Great British countryside.

“In the UK VAT on tourism businesses, at 20%, is far higher than in many other countries, including France (10%), Spain (10%) and Greece (13%).”

“A reduction in VAT to levels seen in other countries will ensure that domestic tourism is competitive and affordable. Competitive pricing will significantly boost the economy and keep our carbon footprint down.”

The CLA published its paper *‘COVID-19: Re-starting the economy in rural areas’ this week arguing that rural areas have an in-built advantage to implement social distancing thanks to lower population density, more space and less reliance on public transport.

Other measures should include:

The tapering of furloughing schemes and other business support measures slowly to avoid a cliff edge

Taking measures to create a more robust food supply chain, including efforts to ensure consumers buy British and buy local

Simplifying the planning system to encourage business start-ups in the rural economy greater flexibility to the use of buildings (e.g. converting into homes).

The rural economy is 16% less productive than the national average, closing the gap could be worth an additional £43bn to the national economy in England alone.

Mr Bridgeman added:

“Although the current situation is very difficult for rural businesses there is also an opportunity to reflect and then to build a better rural economy on a sounder competitive basis.  The rural economy has a huge amount to offer the country – economically, socially and environmentally.  Government can show some real ambition in unleashing its potential.”