The boss of Butlin’s has called on VAT for the tourism industry to be cut during school holidays to test the effect of a tax cut.
Dermot King said Britain’s hospitality industry could not compete with foreign destinations due to the tax burden.
He admitted that so far ministers had been reluctant to cut tourism VAT.
But King told the Mail on Sunday: “If the government finds a full VAT cut too expensive, one thing it could do to test whether it works is to reduce VAT for school holidays.
“That would be a great message for families and it could measure the effect. People would see the difference. We’d cut our prices that day.”
King, who is also a director of Butlin’s owner Bourne Leisure which runs Haven and Warner Leisure Hotels, is among industry leaders leading a British Hospitality Association campaign lower the rate of tourism VAT from 20% to 5%.
Speaking ahead of the Budget on March 8, he said: “If you stay at a hotel in Clacton you are charged VAT at 20% for the privilege. But in a Barcelona hotel you’re charged just 10%.”
The £127 billion-a-year tourism sector is Britain’s fourth largest industry and employs 10% of the UK workforce.
King said: “If you want to rebalance the economy then tourism is the easiest industry to grow. It can create jobs fast, especially for young people, and that growth wouldn’t be sucked out of another part of the economy.
“You are persuading more British families to stay at home and more overseas families to holiday here.”
He said of a zero rate of VAT for the hospitality industry: “It would create 100,000 jobs and give a return in just three years.
“For those reasons I urge the government to think about its tax strategy.”