EU could force package holiday prices up
Package holiday prices will have to rise and up to 5,000 UK jobs could be lost if the EU presses ahead with planned VAT rule changes, the European Tour Operators Association (ETOA) warned yesterday.
The proposals are due to be discussed at a top level European meeting next week (Oct 7). If passed the new rules would require UK operators to charge VAT on the flight or other transport element of a European package holiday. This could mean prices going up significantly – particularly to European destinations with comparatively long flight times from the UK such as Greece.
According to ETOA if the scheme gets the go-ahead it will cost £5billion in export revenue. It wants the government to veto the plans and is calling for the EU to apply VAT to tourism in the same way that it is applied to all other exports.
ETOA executive director Tom Jenkins said: “Inbound visitors are the most precious travellers of all to the UK and to continental Europe because they arrive and spend foreign currency in our theatres, hotels, restaurants and shops.
“We should be encouraging them to come and encouraging companies to bring them here. Instead, we have brought in and are seeking to extend a tax regime that discourages them from coming and disproportionately penalises our own tour operators from bringing them here. “
He added: “All I want is for tourism exports to be treated fairly – in the same way as the exports of other goods and services – i.e. exempt from VAT.”
ETOA believes that the companies likely to be worse hit by the changes are those that organise European trips for customers from countries such as America or Japan.
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