PLASA believes that the proposed tourist tax (dubbed the 'bed' tax) will hit this industry from both sides: not only will it put yet another financial burden on businesses in the entertainment, event and installation sectors where business-related travel accounts for a large part of their ongoing overheads, but it will almost certainly affect tourism revenues, which directly influence the financial performance of this industry.
The rationale behind the proposed new tax is that it is considered unfair that local taxpayers should subsidise the services received by tourists. However, there is wide concern that a price increase would affect the competitiveness of the UK tourism industry - and ultimately tourist numbers. Tourism is worth almost £74 billion a year to the UK (of which over £13 billion comes from international visitors) and employs 7% of Britain's workforce. The Department for Culture, Media and Sport has set a target to increase the value of tourism to £100 billion by 2010, recognising this as the key to further wealth and job creation for the economy. Pundits have suggested that the Olympic Games alone could well provide a £2billion boost to the UK economy. Since there is a clear link between tourism numbers and investment in the attractions, live event, retail, leisure and performing arts sectors, the proposed tax will potentially decelerate growth in these areas.
There are other elements of the review that could also prove detrimental to companies: as part of its remit, the Inquiry is reviewing business rates and looking at whether local authorities should have a role in setting them. It is also considering research commissioned by the Association of London Government on the options for levying taxes on restaurants, entertainment venues and sporting events. Although, these two elements are still very much at the fact-finding stage, if implemented, they could place additional financial burdens on companies already struggling to meet their current obligations.
The Consultation period officially closed on 13 March, but there is an extension in place and opinion will continue to be solicited from key stakeholders in the months to come.PLASA is also lobbying government on a number of other issues at the moment, including regulatory issues such as WEEE and RoHS that will impact on manufacturing companies within the entertainment, event and installation sectors. PLASA is doing all it can to protect its members' interests and assist them in trading competitively in a market that is being increasingly boxed in by complex business legislation and growing imports from less regulated economies.
For further information please contact: Ruth Rossington at PLASA - Tel +44(0)1323 410335. or e-mail: ruth@plasa.org
(Ruth Rossington)
