Campaign group Cut Tourism VAT scored a minor victory in the Houses of Parliament yesterday, when Members called on the government to re-examine the case for reducing VAT on the tourism sector.

During a debate in Westminster Hall, 25 MPs voiced their views on the matter, with a large number speaking in favour of a cut.

MP for South Down Margaret Ritchie, who called the debate, said: “To have a reduction in VAT is very important from the perspective of economy and jobs. Tourism is an absolutely vital industry for our islands, providing 10% of GDP and supporting over two million jobs.”

Cut Tourism VAT, a pressure group supported by a number of tourism-linked companies and associations, wants the government to follow the example of 24 other countries in the European Union in applying reduced rates of VAT on key tourism services such as visitor accommodation.

“We are delighted at the all-party support shown for reduction in this first debate on Tourism VAT in parliament,” said Graham Wason, chair of the Cut Tourism VAT campaign.

“All except the Minister responding were convinced of the need for a cut on VAT for visitor accommodation and attractions and many references were made to evidence, using a Treasury approved financial modelling system, of the positive impact for the UK economy this would have.”

Cut Tourism VAT believes people holidaying in Britain are paying more VAT than they should in comparison to holidaymakers in countries such as France, Italy or Germany, saying this plays a role in dissuading tourists from spending more.

It points to a report by treasury advisor Professor Adam Blake and independent analysis by Deloitte/Tourism Respect that found a reduced VAT rate would boost GDP by £4bn a year; create 80,000 jobs over two to three years; and deliver £2.6bn to the Treasury over ten years.

The Campaign is led by Bourne Leisure Group, Merlin Entertainments Group, the British Hospitality Association and the British Association of Leisure Parks, Piers and Attractions.

Merlin Entertainments plc chief executive Nick Varney said: “It is disappointing that despite very compelling arguments, the government still seems unable to grasp the importance and positive impact of a VAT rate decrease in the tourism and hospitality sector.

"However, it is encouraging that the debate took place, and our messages are beginning to find wider support. We need now to build on that, and continue the fight.”