DUBLIN: The British Government is seeking a better understanding of the economic costs of tourism taxes in Northern Ireland. A call for evidence is expected early this year about VAT and Air Passenger Duty (APD) tax, to report at the next budget, a Treasury statement said.
Financial Secretary Mel Stride recognised the importance of tourism to the economy.
He said: “A call for evidence will enable the Government to fully engage with and understand the concerns of industry, in turn helping the Government to develop a better understanding of the economic costs and potential impacts of those taxes on tourism in Northern Ireland.”
He said the Treasury will continue to engage and collaborate with industry at an official level.
As part of the Tory deal with the DUP the Government said it would consult on VAT and APD.
APD means passengers on short haul flights flying in or out of Belfast must pay around £13. Critics of the duty have claimed that it is causing a reduction in the number of flights in Northern Ireland, as the cost deters some passengers.
It was axed in the Republic of Ireland in 2014.
Many in the hospitality and tourism industry have been campaigning for the abolition of the 20% VAT rate on the tourism sector.
Hospitality Ulster which represents pubs and restaurants and Belfast’s two airports have backed changes to taxation regime.
The Financial Secretary wrote to the Northern Ireland Affairs Committee of MPs at Westminster.
Last year the committee called for regional variations in tourism VAT and other tax changes to assist the sector.
It highlighted the substantial economic benefits to the Republic of Ireland’s tourism industry of the Irish Government’s decision to cut tourism VAT in 2011.
MPs recommended the Government look constructively at a different rate of tourism VAT for Northern Ireland, and called on HM Treasury and the industry to work together to estimate the potential costs and benefits of doing so.
The report argued that abolishing APD on all flights would encourage airlines to bring new routes into Northern Ireland and connect the country with key business and tourism markets.
Colin Neill, chief executive of Hospitality Ulster, said he was encouraged.
”This is another positive step forward, coming so soon after the Chancellor’s budget commitment to undertake research into reducing hospitality & tourism VAT and abolishing Air Passenger Duty in Northern Ireland.
”Hospitality Ulster has led the campaign for a reduction in the hospitality and tourism Vat rate in Northern Ireland, which at 20% puts us at a distinct competitive disadvantage, particularly as our nearest market, the Republic of Ireland, has a 9% tourism vat rate.
”The 20% VAT rate acts as a brake on the growth of the hospitality and tourism sector, which supports more than 60,000 jobs across Northern Ireland.”
He said it was imperative that the rate was cut in Northern Ireland and it was clear that APD was a competitive disadvantage to tourism and the economy.
“The Republic of Ireland, our nearest competitor, abolished their airport tax a number of years ago and Hospitality Ulster would urge this review to do likewise.
“Hospitality Ulster has worked closely with both the Northern Ireland Assembly and our MPs in Westminster to bring about a reduced Tourism VAT rate and abolish Air Passenger Duty.”
