Northern Ireland

VAT cut for tourism 'too costly' Northern Ireland Office minister tells MPs

Secretary of State Theresa Villiers and Northern Ireland Minister Ben Wallace answered MPs questions in the House of Commons
Image caption Secretary of State Theresa Villiers and Northern Ireland Minister Ben Wallace answered MPs questions in the House of Commons

A VAT cut for tourism and hospitality could not produce enough economic growth to outweigh the likely shortfall in tax revenue, a minister has said.

Northern Ireland Office Minister Ben Wallace advised MPs of the government's conclusion during Northern Ireland questions in the House of Commons.

He said it would have to be funded by additional borrowing or raising other taxes, both of which would have a negative impact on the economy.

The issued was raised by the DUP.

Democratic Unionist Party MP David Simpson said that just as the case had been made for a cut in the rate of corporation tax in Northern Ireland, he believed a similar case could be made for reducing VAT on tourism and hospitality, especially golf clubs where he claimed there is an anomaly.

Image caption DUP MP David Simpson said he believed a separate rate of corporation tax could help the tourism and hospitality sectors

However, Mr Wallace pointed out the government's other economic initiatives, which he hoped would make tourism businesses more competitive.

Conservative MP Kevin Foster questioned whether if the rate of VAT could not be lowered, the threshold might be altered to help smaller tourism businesses.

Mr Wallace said he would write to the Chancellor George Osborne about the matter.

The issue of VAT on tourism is currently the subject of an inquiry by the Northern Ireland Affairs Committee, which is examining whether the current UK VAT rate places Northern Ireland's tourism and hospitality sector at a competitive disadvantage, and whether its reduction locally could promote growth.

During Northern Ireland questions, Secretary of State Theresa Villiers refused to be drawn on the benefits for Northern Ireland if the United Kingdom left the European Union (EU).

The DUP's Sammy Wilson invited Ms Villiers to agree that "a vote to leave the EU would help the Northern Ireland economy insofar as it would release £18bn every year for expenditure on public services, would enable us to enter trade agreements with growing parts of the world and would release us from the stifling bureaucracy of Europe".

Image caption Secretary of State Theresa Villiers refused to be drawn on the benefits for Northern Ireland if the United Kingdom votes to leave the European Union

However, Ms Villiers declined to "engage in arguments which are rightly a matter for everyone in this country when they get to vote on that referendum".

Ms Villiers is widely believed to be one of the most Eurosceptic members of Prime Minister David Cameron's cabinet, although last week she told the BBC that she supports his attempts to renegotiate the terms of the UK's EU membership.

The Social Democratic and Labour Party (SDLP), Scottish National Party (SNP) and Labour MPs all raised what they argue would be the potentially detrimental impact of any UK exit from the EU for Northern Ireland's economic development.

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