Although the move would lead to an initial loss of £7.8 billion in revenue, he claims it would be eventually eclipsed by:
• “a best case scenario” creation of 670,000 new full and part-time jobs
• boost in income tax from new employment, and savings in unemployment benefits
• revenue from corporation tax
• sales increases of 12-15% in pubs, restaurants and hotels on the back of lower prices
• a boost to the competitiveness of the tourism industry. According to VAT Club figures, 22 European countries had a reduced rate of VAT for hotel accommodation as at January 1, 2012, while 13 had a lower rate for cafes, pubs, restaurants and catering services. A 2011 World Economic Report ranked the UK 133rd out of 139 on price competitiveness.