asked Her Majesty's Government:Whether they believe that a reduction in VAT on hotel accommodation might boost tourist traffic and so increase Exchequer revenues. [HL3267]
A reduction in the VAT rate on hotel accommodation would lead to a fall in VAT receipts. Even if the reduction were passed on to customers the fall is not likely to be offset by additional VAT arising from increases in tourist traffic or by other tax receipts. There would be a net loss to the Exchequer.