Skip to main content

Tourism (VAT)

Volume 530: debated on Wednesday 6 July 2011

4. What recent representations he has received on the rate of VAT applied to tourism activities in Northern Ireland. (63170)

Northern Ireland has enormous attractions for tourists and we strongly support efforts to encourage them to visit. The hon. Member for South Down (Ms Ritchie) raised the issue of VAT rates at a recent meeting with my right hon. Friend the Secretary of State, but these matters are not our direct responsibility.

The Minister of State should be aware that as of last week, VAT in the tourism sector in the south of Ireland has been reduced to 9% for 18 months. Similar steps have been taken in France and Germany. Will he and the Secretary of State use their standing with their colleagues in the Treasury to commend a sectorally targeted VAT cut for tourism throughout the UK?

The hon. Gentleman knows that the EU average for VAT is 20.8%, whereas VAT in the UK is 20%. Germany’s lower rate is simply a mechanism to redistribute money from the centre to the Länder, as Germany has many local tourist—or “bed”—taxes. We would all like lower taxation and we would all like the deficit to be addressed, which is what we are seeking to do, but this is not just about the rates of VAT. London hotels are doing better than they have done for some time, there are more tourist visitors to Northern Ireland than there have been for some time and the hon. Gentleman’s city of Londonderry will be city of culture in 2013. We need to offer people value for money and good hospitality—that I am sure we can do—and the issue of VAT will then become secondary.

On future taxation policy, will the Secretary of State tell us whether the electricity White Paper that is soon to be published will contain proposals to address the fact that Northern Ireland has a single electricity market, linked with the Republic of Ireland? Will it address the implications of those arrangements for providers and users of energy in Northern Ireland, in that they could influence the market disproportionately?

The hon. Gentleman is very cunning to have got that question in. The Treasury will have heard his remarks, and I shall make certain that the relevant Treasury Minister gets back to him to address those pertinent points.