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Published on Wednesday, January 7, 2015

Falling euro to spark 'massive rush to book holidays in Europe'

Bosses of domestic travel companies are warning that they will find it hard to compete on price with their European competitors this year due to the falling value of the euro combined with high VAT rates in the UK.

The Government's plan to abolish air tax for children, starting from May this year, will make it even harder for them to compete, they said.

Calling for a reduction in VAT for tourism to 5%, members of the Cut Tourism VAT campaign said it had the support of over 43,000 businesses and more than 100 MPs.

Dermot King, managing director of Butlins, said: "Unfortunately, the Government's new measures on APD (air tax) have created an anomaly whereby families who go abroad get a new tax benefit but families who stay at home do not.

"Tourism, particularly domestic tourism, can help drive growth in the UK economy but only if it remains competitive. We urge the Government to reduce Vat on UK holidays to a fair level, so that we can offset the impact of a falling Euro and reduced APD charges." 

The euro is now worth just 78p compared with 84p last March, making the Continent 7% cheaper for holidays, said the Cut Tourism VAT group.

"This will almost certainly lead to a massive rush to book holidays in Europe and further afield by thousands of British families. This could have a devastating effect on many struggling UK tourist companies and resorts."

Cut Tourism VAT campaigners say VAT in Britain on accommodation and attractions is three times that of Belgium, Greece, Netherlands and Portugal and twice that of Germany and France. "This makes it more difficult for hard-working families to be able to afford a holiday in the UK," it said.

Out of the 28 EU member states, Britain is one of only three that does not take advantage of the reduced rate of VAT on visitor accommodation and visitor attractions.

David Bridgford, Strategy Director, Merlin Entertainments said: "The UK Government has failed to understand that tourism is a price sensitive export. Their failure to address the UK's price competitiveness means UK tourism businesses are losing out and the tourism jobs we could create are being exported to our rivals."

Graham Wason, Chairman of the Cut Tourism VAT Campaign said: "The Government has a huge opportunity to boost British exports by lowering VAT. Other European countries, like Ireland, know that helping their tourism industries compete is an investment that will pay major dividends in terms of jobs and extra tax revenue. It's time for Westminster to recognise the benefits of a lower rate of Tourism VAT."

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