JACQUES Borel makes a convincing economic case for Chancellor George Osborne to slash VAT for the hospitality sector in his 2014 Budget.
Although the move would lead to an initial loss of ÂŁ7.8 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.