A newly-launched campaign urging the government to cut VAT on hotels and attractions to 5% has won support from 60 MPs from across the country.
The hospitality and tourism industry is set to unveil new research next week which will further underline its economic case.
The aim is to make Britain more competitive, cut prices and create over 120,000 jobs while adding around £4 billion to economic output. There would be an initial hit to the Treasury but this would be made back inside one parliamentary term, campaigners claim.
Ministers have been forced to admit that the change can be made without prior approval from the EU after it was revealed that the majority of EU states have all cut their holiday VAT rates.
As well as the Cut Tourism VAT lobby, supported in the Sun this week, a parliamentary motion tabled two weeks ago by Margaret Ritchie, SDLP MP for South Down, has also generated backing in Westminster.
Holidaymakers in Northern Ireland face paying 20% VAT but only 9% when travelling into the Republic of Ireland – which has used its right to make the cut.
Ritchie said: “London has benefited hugely post-Olympics, but towns right across Britain and Northern Ireland have a lot to contribute to the economic recovery.
“Cutting VAT on hotels and attractions will enable the many towns reliant on tourism to grow faster and support the excellent work the sector already does employing young and low-skilled people.
“Ultimately, we are an island and in an increasingly global marketplace we cannot continue to price ourselves out of the equation for tourists who may choose between Europe and Britain and Northern Ireland for their holiday.
“The high level of VAT at home also leaves us in the ridiculous situation where it’s cheaper for people in Northern Ireland and Britain to fly abroad – which is bad news for the environment, the economy and our balance of payments deficit.”
Campaign chairman Graham Wason said: “Margaret’s efforts to highlight this important issue will echo support from every corner of the UK. It’s no coincidence that being an island makes ours a very tourist-focused economy which is why we need to overcome the startling anti-competitive stance we currently take.”
Conservative Blackpool North and Cleveleys MP Paul Maynard said: “I have been a big supporter of this campaign and have made my points very clear to successive ministers.
“I believe by cutting VAT we will increase levels of incoming tourism, making the United Kingdom much more attractive to visit. Incoming tourism is new money into the economy of this county and should be encouraged where possible.”