The chancellor’s pre-Budget report was hailed as a crisis measure but did little to alleviate the downturn for travel.
A temporary cut in VAT to 15% from December 1 will have no effect, according to Federation of Tour Operators director-general Andy Cooper.
Tour operators pay VAT on their sales margin, not the total price of a holiday, and Cooper said: “There is not that much margin.”
He forecast no price reductions and no rebates for clients, although tour operators reported requests for refunds.
Small travel businesses – with annual profits up to £300,000 – will benefit from the postponement for a year of a rise in corporation tax from 21% to 22%.
However, all employers and staff will pay higher National Insurance contributions from 2011.
Travel Trust Association and Worldchoice managing director Simon Hargreaves said: “The chancellor did nothing to help this industry. The positive impact will be minimal.”
Travel and the pre-budget report
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