Parliamentarians to probe VAT rate in Northern Ireland tourism sector
A parliamentary inquiry has been launched into whether the VAT rate in Northern Ireland puts tourism at a disadvantage.
The industry is worth more than £750 million to the local economy and is responsible for 43,000 jobs.
The Northern Ireland Affairs Committee of MPs is to consider how the Government can better support a sector facing stiff competition from the Republic where a lower rate of VAT is imposed.
Chairman Laurence Robertson said: "The tourism and hospitality industry has a vital role to play in growing the Northern Irish economy and we are keen to find out how, through the tax system, HM Government can better support hotels, restaurants and other businesses to attract visitors.
"In particular, we want to explore whether the UK's 20% VAT rate is putting businesses at a competitive disadvantage, especially when compared with their counterparts across the border."
The inquiry will consider w hat effect would a reduced rate of UK VAT have on the tourism and hospitality sector in Northern Ireland and to what extent that would encourage tourists to visit.
It will investigate the impact in other countries that have implemented a reduced rate in their tourism and hospitality sectors and what effect the Republic of Ireland's 9% VAT rate on tourism had across the border.
Parliamentarians will consider what services should benefit from a reduced rate and which should be excluded.
Other key questions include whether a reduction will lead to a loss of tax revenue and, if so, how should this be paid for? What other tax changes could the Government implement to support the tourism and hospitality industry in Northern Ireland, including the hosting of major international sporting events?
Colin Neill, chief executive of Hospitality Ulster, said all but four EU member states have introduced reduced VAT rates for visitor accommodation and 13 members states have introduced a lower VAT rate for restaurants.
"We were told corporation tax could not be devolved but with a concerted effort that was progressed. We need to take the same attitude towards the VAT issue and be relentless in that pursuit," he added.