VAT (Tourism) (Hansard, 8 February 1996)

§ 8. Mr. Llwyd
To ask the Chancellor of the Exchequer how much value added tax the Exchequer recovered from the tourism industry in (a) 1993, (b) 1994 and (c) 1995; and if he will make a statement. [12642]

§ Mr. Heathcoat-Amory
There are no reliable figures available on the amount of value added tax paid by the tourism industry. Some indication of the scale is given by the net VAT paid by hotels and similar businesses. In the three years to March 1995 this amounted to £614 million, £668 million and £727 million respectively.

§ Mr. Llwyd
The Minister may be interested to know that I recently conducted in my constituency a wide survey of hoteliers and others involved in tourism. At the top of everyone's list was the problem of the imposition of 17.5 per cent. value added tax. That rate makes them uncompetitive compared with France, where it is 5.5 per cent.; Spain, where it is 7 per cent.; and Italy, where it is 9 per cent. Is it not time to review the imposition and the rate of VAT on our tourism industry?

§ Mr. Heathcoat-Amory
The tourism industry has to pay tax just like any other industry—in some member states it is paid at a higher rate and in some it is paid at a lower rate. The tourism industry in this country is doing well. I am advised that in 1994, there were 21 million visitors to the United Kingdom—that figure was up on the previous year, and on the year before that. The industry does not need and will not get a tax privilege. The best thing that Governments can do is to stay out of the way, to stop over-regulation and to try to lower taxes generally, not just on tourism.

§ Mr. Nigel Evans
Tourism is extremely important for small businesses, especially small businesses of Ribble Valley. Does my hon. Friend agree that one of the great boosts to tourism is fighting hard to ensure that our small businesses involved in tourism do not suffer from the imposition of the minimum wage or the social chapter?

§ Mr. Heathcoat-Amory
Yes. Tourism is, classically, an industry that would suffer from over-regulation and red tape, whether it came from an opposition party or by the back door from the European Community. We are, therefore, adamant in keeping the social chapter out of Britain so that it does not restrict the highly successful growth of the tourism industry noticed by my hon. Friend.