Reduce trade deficit through VAT cut, says BHA

With the UK's trade deficit figures larger than at any time since 2008, the British Hospitality Association has reminded the government that a reduction in tourism VAT to 5% would improve the deficit by £22.2b over a 10-year period.

According to the Office for National Statistics, the gap between imports and exports for the first three months of 2016 is £13.3b, up from £12.2b on the same period last year.

Analysis by Tourism Respect and Nevin Associates has found that reducing VAT from 20% to 5% would have a significant effect on the trade deficit. Its research revealed that a reduction in VAT would result in an increase in both foreign exchange earnings and a reduction in foreign exchange expenditure by UK residents holidaying abroad.

Cut Tourism VAT campaign chairman and Butlins managing director Dermot King (pictured) said there had never been a better time for the government to reduce the VAT on tourist attractions and accommodation.

"Tourism is the UK's only major export subject to 20% VAT, double the rate of the EU average. Growing numbers of MPs are joining our call to the Treasury for a reduction in VAT on tourism exports and we now need to win the hearts and minds of the British public who don't realise that they are being taxed harder than almost anyone else in Europe for simply going on holiday in their own country."

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