VAT Breaks For Hospitality Could Unlock Jobs In Europe
by Ulrike Lomas, Tax-News.com
A new pan-European study commissioned by two industry organizations, The Brewers of Europe and Hospitality Europe (HOTREC), calls for value-added tax breaks for the hospitality sector in light of the "critical role" that the industry plays in generating jobs and significant tax revenues.
The study prepared by Ernst and Young is in support of the two organizations' lobbying for more supportive national and European Union-level policies in Brussels to boost the sector's performance.
The research points out that Europe's hospitality sector in 2010 directly or indirectly created EUR1 trillion (USD1.35 trillion) in output, equal to 8.1 percent of the EU's total economic output. The hospitality sector provided 29 percent more jobs in 2010 than in 2000, whereas in the wider economy, during the same period, the total number of jobs increased by just 7.1 percent or less than 1 percent per year.
According to the study, which includes country-by-country analysis, the sector in 2010 contributed EUR126bn to government coffers in excise duties, value-added tax, employment and social security taxes, and supported approximately 16.6 million EU jobs, or one in every 13 jobs.
"Measures adopted in times of austerity, which increase tax rates at a time when disposable incomes are falling, are likely to undermine the ability of the sector to generate growth," said John Hopes, lead author of the study. "The short term response to this is likely to be cost-cutting measures, and later, a loss in permanent capacity."
Kent Nystrom, the President of HOTREC argued: "This [research] shows why policymakers should carefully consider the impact of VAT rates and hospitality taxes. Non-restrictive legal and fiscal measures could have a huge impact in terms of facilitating long-term high-level performance of the hospitality sector."