World Travel & Tourism Council urges EU finance ministers to reduce taxation

World Travel & Tourism Council urges EU finance ministers to reduce taxation

The World Travel & Tourism Council (WTTC) has written to all 27 finance ministers in the European Union urging them to recognise the important role of the industry in stimulating economic growth and jobs, while avoiding unproductive knee-jerk tax hikes at a time of austerity.

The letter, written by Michael Frenzel, chairman of the executive board, TUI AG and WTTC president David Scowsill, reminds ministers that tourism is a key generator of employment across the European Union.

The industry directly generates ten million jobs across Europe, substantially more than the automotive manufacturing (3.2 million), mining (3.6 million) and financial services sectors (8.5 million), argues the WTTC.

“Given the labour intensity of tourism, and as the data shows, the sector is one of the few economic sectors which can generate economic growth with jobs,” the letter explained.

“Travel is seen as a cash cow, and an easy source for generating quick money through new or expanded taxation.

“However, the evidence suggests that taxing tourism does not reap benefits.”

Recent research by WTTC shows that the Air Passenger Duty alone costs the UK economy £4.2 billion in GDP and 91,000 jobs through lost business.

The Netherlands abolished its air departure tax after one year following significant decreases in passenger volume.

The €300 million earned in tax revenues was negated by the cost of €1.2 billion to the economy as passengers used alternative airports in neighbouring countries.

The Irish Air travel tax of €10 per person was reduced to €3 per person following a two million decrease in travellers to Ireland over three years.

In Germany the reduction of VAT from 19 per cent to seven per cent for accommodation services at the beginning of the 2010 - in the midst of the financial and economic crisis - has paid off economically.

The number of available jobs in the hotel industry has since then increased on average by 20 per cent, and the number of unemployed persons has dropped significantly more than in other sectors.