Hoteliers plead for tourism tax cut
Tourism tax in Northern Ireland should be cut to 5%, hoteliers said.
The relatively high VAT rate of 20% puts the region at a disadvantage compared to the Republic of Ireland and other countries. A reduction would stimulate the industry and leave it well positioned to benefit from strengthening consumer and business confidence in the UK economy, the Northern Ireland Hotels Federation (NIHF) added.
Traders claimed not reducing the tax could cost the economy £128 million in lost economic potential over the next seven years.
A report for the Federation said: "Lowering the VAT rate could make NI a more accessible destination for tourists who may not have previously been able to afford a trip.
"It could also encourage those considering a visit to stay longer, upgrade their accommodation, use the savings for expenditure elsewhere in the economy or return for further visits."
There are 139 hotels in Northern Ireland, raising £340 million in revenue last year.
In a document outlining plans for the future, the Federation said by 2020, they could double the contribution to GDP and generate £1 billion in tourism spend. This would create 10,000 jobs.
More tourism will mean more construction, increased retail spending and greater demand for things to see and do.
The Federation's report added: "To achieve this growth we need to become more competitive. One way of doing this would be to reduce VAT on accommodation, visitor attractions and out-of-home meals."
It said: "Northern Ireland's relatively high rate of VAT puts it at a distinct disadvantage to other European countries - particularly the Republic of Ireland.
"Given the proven responsiveness of visitor arrivals/expenditure to changes in tourism taxes, a VAT rate cut could lead to increased demand and provide a much needed stimulus to the industry - leaving it well positioned to benefit from strengthening consumer and business confidence in the UK economy."
Changes to the rate would have to be negotiated with the Treasury.
The report, Tourism 2020 - Investing in Our Future, called for a more cohesive tourism strategy.
Federation president James McGinn said it should be supported by all executive departments and focus on growth while establishing clear and concise responsibilities. A draft strategy was written in 2010 but never adopted.
Mr McGinn said: "The NIHF believes that the formal adoption of a strategy would result in the Northern Ireland Assembly taking a more cohesive approach to the industry and would reinforce the message that tourism is being taken seriously.
"A strategy should set out the contribution tourism currently makes and put in place the building blocks for the future."