§ Mr. PendryTo ask the Secretary of State for National Heritage what assessment his Department made, prior to the Budget statement, of the effect that imposition of VAT on non-essential public transport would have on the United Kingdom tourism industry.
§ Mr. DorrellThe application of VAT is a matter for my right hon. and learned Friend the Chancellor of the Exchequer, who announced on 29 November that services relating to entertainment or recreational activities and car parking at airports, which include passenger transport, will become wholly standard rated. The measure, which will affect a limited range of businesses, will not involve significant compliance costs for any business category, and is not expected to affect international competitiveness. Indeed, where supplies become wholly taxable at the standard rate instead of being apportioned, VAT accounting requirements will become simpler.