Tourism Industry: VAT Reduction

Debate between Mel Stride and Paul Girvan

Wednesday 21st November 2018 Commons Chamber

[Mel Stride]

The right hon. Gentleman makes a very important point. As somebody who philosophically believes in lower taxes, I think that is a very strong argument. However, unfortunately there is the cost argument. To use the same kind of principles to the right hon. Gentleman’s argument on recycling, clearly if we were bringing in less by way of taxation as a consequence of the reduction, there would be less to spend on other things that arguably might help tourism, including improved infrastructure and maybe even tax reliefs in other areas, such as the progress that we have made in reducing small retailers’ business rates.

We have one of the highest VAT thresholds of any country in both the European Union and the OECD, which is an advantage to us and our tourist sector.

[Paul Girvan (South Antrim) (DUP)]

We see the reduction in VAT as one of the cards in the deck that can help to grow our economy, and it is vitally important, from a tourism perspective, that we look at that. However, one of the other tools in the box is air passenger duty. We are competing against Dublin because the Republic of Ireland has zero APD. That is not just affecting Northern Ireland—it affects airports throughout the UK because, to save on APD, people are travelling from the UK to Dublin to go on to America. That has an impact not just on Northern Ireland but on airports in the UK.

[Mel Stride]

The hon. Gentleman makes a very important point. In fact, I have been to Northern Ireland and met representatives of Belfast airport and others, and I have met them here in the UK—in London—as well. As he will know, we had a call for evidence on APD, which was launched at the Budget before last, and we have reported back on that. We have now set up a technical working group to see what kinds of opportunities there may be to devolve APD to Northern Ireland, although at the moment there is the critical issue of the absence of a Northern Ireland Executive. In the longer term, we would certainly be committed to seeing the issue devolved, and then of course it would be for the Northern Ireland Executive, once reconstituted and up and running, to take the appropriate decisions around that.

Returning to VAT, we do of course have reduced rates in the United Kingdom in areas like museums and transport such as buses and trains, which is not universally the case across our competitor nations. It is also possible, through the retail export scheme, for certain visitors to the UK to reclaim VAT from certain retailers. That is another important VAT relief.

In essence, the right hon. Member for Orkney and Shetland is right that I was not going to spring up to the Dispatch Box and announce a huge tax cut across the tourism sector, much as I would love to have done. Perhaps in this crazy world in which we are living, I should have done, but there we are—I did not. I restrained myself and was responsible, for once. However, I absolutely reassure him that everything that he has said on this matter this evening, and indeed has said in the past and will say in future, has been and will be very carefully noted. We will continue to look at all taxes, and certainly VAT. I look forward to further engagement with him in the coming weeks and months, and thank him very much indeed for bringing this important debate to the House.

Question put and agreed to.