Unlimited tax raising powers on family holidays will have a ‘genuinely catastrophic’ impact, risking at least 33,000 jobs and costing more than twice the saving from the VAT energy cut.
The Government’s plans to introduce an unlimited, uncapped and expansive holiday tax will price working families out of a British holiday, UKHospitality said.
The scope of the holiday tax is so wide that independent economic analysis that said it will cost 33,000 jobs, increase tax for holidaymakers by £1.6 billion and reduce GDP by £2.2 billion is now the bare minimum impact to be expected.
It comes in a week where the Chancellor has spoken about creating ‘growth Britain’ and cutting red tape, the Department for Work and Pensions has announced a new scheme to help people into work, and the Prime Minister acknowledged at PMQs that more support is needed for hospitality.
Its holiday tax works in direct opposition to all of those statements and the Government’s goals to create jobs in every postcode and reduce the cost of living.
Allen Simpson, Chief Executive of UKHospitality, said: “The millions of families who will be forced to pay significantly more for their holiday will hardly be comforted by their money going to prop up local government, when they’re struggling to make ends meet.
“The 33,000 people who could lose their jobs as a result of this tax, during an employment crisis, will be rightly furious.
“In a week when the Government has talked about growth, cutting red tape, getting people back into work and supporting hospitality, it is set to announce yet another tax that will do the absolute opposite.
“Give Mayors one tax-raising power on one sector and they will pull that lever until it snaps. You just need to look at the long list of Mayors already lining up to do just that.
“The Government claims this tax is normal. It’s not. There are scant examples of a destination with our 20% level of VAT and a holiday tax, for a reason. If it wants to use that argument, it should practice what it preaches and lower hospitality VAT to 10%, in line with Europe.
“It’s now more important than ever that the Budget reduces hospitality’s costs, given the holiday tax is set to increase them once again. Tinkering around the edges is not enough. There has to be a substantial reduction in hospitality’s tax burden next month. Cut VAT, fix business rates and reduce NICs.”
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