VAT (Tourism and Hospitality)

Albert Owen (Ynys Môn) (Lab)
9.  What recent discussions he has had with his ministerial colleagues on the effects of VAT on the tourism and hospitality industry in Wales.

The Secretary of State for Wales (Mr David Jones)
Tourism and hospitality play an important role in the economy in Wales, attracting more than 4 million people from across Great Britain between July and September last year. The World Economic Forum has recently ranked the UK fifth in Europe in its travel and tourism competitiveness index.

Albert Owen
Our near neighbours, the Republic of Ireland, and most other European countries have reduced the level of value added tax in the tourism sector, boosting jobs, growth and investment in their countries. The United Kingdom and Wales are among those with the highest rates of VAT in Europe, and, according to an independent inquiry, that has led to the suppression of jobs and investment. Will the Secretary of State lobby the Treasury to ensure that we have a competitive rate of VAT and that we reduce VAT, which is a tax on jobs?

Mr Jones
I am sure that the hon. Gentleman is as happy as I am that tourism expenditure in Wales increased by £746 million over the past year. The United Kingdom is highly competitive in the tourism market. As I said in my initial answer, the World Economic Forum has indicated that the UK is the fifth most competitive economy in Europe, ahead of France, Portugal and Italy.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
As in Scotland, VAT on tourism in Wales has a negative effect on the industry. Will he press his Treasury colleagues to ensure a reduction from 20% to 5%, as requested in yesterday’s debate in Westminster Hall, to benefit very scenic constituencies like mine and Carmarthen East and Dinefwr?

Mr Jones
I am hugely grateful to the hon. Gentleman for the interest he shows in the Welsh tourism industry. I invite him to visit Wales and see what a competitive product we have there.