Belfast Telegraph

Home Business Jobs

Slashing tourism tax in Northern Ireland could create 2,000 jobs, claims report

A report has found that slashing Northern Ireland's tax on accommodation and visitor attractions by 15% could add more than 2,000 jobs to the regional economy.

EU law prevents member states from setting different levels of the charge for different regions. That power will be repatriated to the UK after Brexit and the DUP is pressing for a speedy cut.

The findings come from an report commissioned by Cut Tourism VAT, a campaign group that represents businesses in the tourism and hospitality sector from across the United Kingdom, and carried out independently by economic research firm Nevin Associates Ltd. 

This comes as a precursor to a forthcoming report on cutting VAT and and Air Passenger Duty committed to as part of the DUP's confidence and supply agreement with the Conservatives.

As it stands VAT on visitor accommodation and attractions in Northern Ireland sits at 20%.

In the report it finds cutting this to 5% would create 2,094 jobs across the province over a period of five years, with this number rising to 2,713 over a 10-year period.

While there would be a loss to the Treasury income in the first year of £4.2 million, the gains from the subsequent five years would amount to £32 million, with this rising to £109 million over a 10-year period. 

One major point made in the report looks at Northern Ireland's competitiveness in comparison to the Republic of Ireland, where total tourism revenues were eight times those achieved in Northern Ireland, despite only having 2.6 times the population.

VAT on travel and tourism in the Republic of Ireland is set at 9%, something that the report credits with drawing in a larger number of overseas visitors.

In 2016 the Republic of Ireland pulled in €6.5 billion (£5.3 billion) in tourism revenue, around 80% of which was generated by overseas visitors and visitors from Northern Ireland.

In the same year Northern Ireland pulled in just £0.6 billion in tourism revenue from out-of-state visitors, with the bulk of these coming from mainland Great Britain.

Nigel Dodds, the DUP's senior MP at Westminster, said: "A cut in VAT in the tourism sector would boost that sector enormously - it would attract more visitors, create more jobs and be a massive boost to the economy in the long run.

"This is a win-win; a win for the Treasury and a win for Northern Ireland and win for people's employment prospects."

Speaking about the findings, chief executive of Hospitality Ulster Colin Neil said: "Whilst existing research shows a cut in tourism VAT across accommodation, food and visitor attractions would create more than 200,000 jobs across the UK, this report is the first one that has looked in depth at the impact of a VAT cut on accommodation and visitor attractions in Northern Ireland.

"It demonstrates the significant benefits that come from a VAT cut and shows a very short period before the Treasury benefits. At this point we can only extrapolate from previous UK-wide research what the benefits of a cut to VAT on food would be, but even modest estimates would see an additional 4,000 jobs added."

Belfast Telegraph Digital

Weekly Business Digest Newsletter

This week's business news headlines, directly to your inbox every Tuesday.