Dave Thompson MSP

Dave Thompson, SNP MSP for Skye, Lochaber and Badenoch has called on the UK Government and Danny Alexander, Chief Secretary to the Treasury, to look at the example of the VAT reduction on tourism related businesses in Ireland to give a boost to the Highlands and Islands economy.

At present the UK’s rate of 20% VAT is exceeded only by Denmark and Lithuania, whilst Luxembourg has a rate of only 3% and Portugal, a major tourist destination, 6%.

Ireland introduced a 9% rate in 2011 on all tourist-related businesses and services as opposed to the standard rate of 23%, and a report on the effect of this has shown it has given a significant boost of around 40 million Euros to the economy and created 10,000 jobs.

Dave said: “Tourism and related industries are an important part of the economy of the Highlands and Islands and a reduction in VAT would give a valuable boost to the industry.  A rise in visitor numbers could also result in a boost for other Highland businesses. It was reported recently that visitor numbers to the Scottish Islands had increased very significantly since the SNP Scottish Government introduced RET which reduced visitors costs and the same would happen with a cut in VAT.

“It is not cheap to holiday in Scotland and the standard rate of VAT puts many businesses at a significant disadvantage when competing with lower rates in other parts of Europe. This is particularly true for Ireland where the tourist experience is similar to that in the Highlands (except now it is cheaper). A reduction in VAT would produce significant savings for tourists, encouraging them to spend money in Scotland rather than overseas.

“We need to give our tourism industries a boost, a chance to fight back rather than asking them to fight with one hand tied behind their backs because of the UK government’s refusal to match changes in VAT in other EU countries.

“This is yet another example of Westminster’s inability to connect with the rural communities of Scotland. Only a ‘Yes’ vote in September will allow our tourism industry to thrive.”  

Notes:

Information on 9% VAT in Ireland: http://www.revenue.ie/en/tax/vat/leaflets/rate-change-9-percent.html