Tue 25th Feb 2014
Feb 14: Re-evaluation of VAT and APD needed to aid tourism
Willie Walsh, the chief executive of British Airways, last week added further fuel to the campaign, which NI Chamber has long supported, for the removal of Air Passenger Duty (APD) during his latest flying visit to Belfast.
Arlene Foster, the Enterprise minister, who was also present at the event at Belfast City Airport, will have been influenced by his statement that APD is inhibiting our air links with Europe and further afield, essential connections our exporters need to grow their business in existing and new markets.
The Minister, of course, had just returned from a successful trade and tourism mission to Singapore and Indonesia. Interestingly, she shared a number of platforms in Singapore with Richard Bruton, the Republic’s Jobs minister. Competing for jobs against the Republic certainly isn’t getting any easier because of Dublin’s plans to bin APD and make travel to and from the country substantially cheaper than from our airports.
But APD, of course, isn’t the only handicap facing business and tourism in Northern Ireland against the Republic, our closest neighbour and arguably our biggest competitor. Corporation tax continues to be a serious issue for Northern Ireland. In addition, our hospitality industry is seriously disadvantaged in terms of value added tax.
At a time when we are aiming to maximise the business benefits of the tremendous success of Minister Foster and her colleagues in the Executive from the Giro d’Italia starting her in May, Dublin International Airport’s position as the island’s main airport particularly for tourists is being further strengthened.
Both APD and VAT are the responsibility of the UK Government, which has consistently turned down protestations from business, hospitality and tourism bodies across the country, the most recent being the VAT debate sparked this month by Margaret Ritchie, the SDLP MP for South Down.
Pleas from Mrs Ritchie and other politicians unfortunately were dismissed by the Treasury on the basis that these would cost too much. Yet there’s evidence in the Republic that the nine per cent VAT rate has helped to increase tourism earnings and provided additional employment. Research suggests that a cut in VAT here to the same level of five per cent in the Republic could lead to 40 per cent rise in employment in our hotels. Over 6,000 new jobs have been created in the Republic, all contributing to the state’s revenues.
NI Chamber has also been forthright in calling for a sharp cut in VAT particularly within the strategically Important tourism industry and one which impacts others especially food and drink, as well as transport and construction.
We all recognise that tourism has the potential to make an even greater contribution to the local economy and employment, especially in predominantly rural communities unlikely ever to attract significant industrial investment. If we are to regenerate what has become known as the sub regional economy, a key focus for the Department of Enterprise, Trade and Investment, we need to focus greater resources on tourism accommodation and amenities.
Removing APD and cutting VAT to five per cent make sound business sense. We need to increase existing pressure on the UK Government to do what needs to be done and as soon as possible.