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Volume 264: debated on Tuesday 24 October 1995

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To ask the Chancellor of the Exchequer what assessment he has made of the effect of British competitiveness of the level of VAT on tourism products; and what conclusions he has reached. [38454]

There is no compelling evidence that the fiscal and regulatory environment in the United Kingdom places tourism at a disadvantage. We have a lower standard rate than most EU member states and our zero rate is applied to a wide range of consumer expenditure.

To ask the Chancellor of the Exchequer what progress has been made in the consultations between Customs and Excise and the travel industry about the effects of the Value Added Tax (Tour Operators) (Amendment) Order 1995; and if he will make a statement. [39727]

There have been extensive and very productive talks over the summer between Customs, the travel industry and its representatives. These talks have produced a package of options to be publicised today which should allow most tour operators to organise their business so as to minimise any potential for distortion of competition while still fully respecting the provisions of the order. Unlike earlier proposals put forward by some in the industry, this package will not increase taxation for four operators' products. The major trade associations have confirmed that the options adequately address the industry's immediate concerns. Customs' review of the tour operators' margin scheme will now proceed to its second phase which will involve an examination of longer-term issues, including possible simplification of the scheme.