A VAT cut could provide a much-needed boost to the hospitality and tourism industries

By Robert Kerr

IF the hospitality and tourism sector is to prosper, then it needs more help from the government, rather than being hindered by unnecessary administrative burdens.

Tourism performance in Scotland last year was affected by a number of factors, including poor weather in many parts of the country, the effect of the London Olympics and continued pressures on consumer spending.
Yet whilst there have been one or two helpful interventions of late, all too often these initiatives are counteracted by a range of measures which hinder our hospitality and tourism sectors.

Robert Kerr is chairman of French Duncan chartered accountants

The proposed changes to liquor laws to give new powers to the police around football matches and restrictions on hoteliers’ ability to offer all-inclusive food and drink packages are examples of plans that would act against the interests of the public, the hospitality sector and tourists.
What would be more helpful would be a reduction in the rate of Air Passenger Duty, together with slashing VAT on visitor accommodation from the present uncompetitive 20% to 5% in a drive to attract tourists and give the local economy the boost it so desperately needs.
Not only is a reduced rate of VAT for tourism an effective way to create jobs, it enables hoteliers to pass on the benefit directly to their customers through a reduction in room rates.
Reducing the price of UK tourism through a VAT cut would encourage weekend breaks and days out, entice UK residents to switch from foreign to domestic holidays and encourage more visits to the UK from overseas.
Wealth and employment generated by the hospitality sector is spread across the UK, providing economic opportunities in rural and urban locations, where jobs are most needed. As the main driver of tourism and other sectors which rely on a vibrant and dynamic hospitality industry, the potential for further job creation, export earnings and investment is yet to be fully tapped.
Yet, as if the government was not already doing enough to make earning a living difficult for hospitality operators, the impending introduction of new pension regulations will impose a further administrative obstacle.
Despite the fact that many jobs in the hospitality sector are casual and
part-time, publicans and hoteliers will still be required to go through the time-consuming administrative rigmarole of putting all employees into a pension scheme, the majority of whom will invariably request to be removed from the scheme a month or so later.
Scotland is preparing to welcome the world in 2014, when it hosts the Year of Homecoming, the Commonwealth Games and the Ryder Cup.
If we are to maximise the economic opportunities such events present, then we could do with more help from our governments rather than hindrance.
• Robert Kerr is chairman of French Duncan chartered accountants.

Image – French Duncan chairman Robert Kerr.