There is evidence that the dramatic drop in
tourism since 2008 has plateaued. We are still however bumping along at the
bottom.
The long recession hasn’t helped of course,
but people can get tired of feeling poor, particularly when they haven’t felt
any real hardship themselves. Asset rich folks can be persuaded that the meagre
returns on their savings justify spending on indulgences.
One element holding back the long haul
tourism business is the much-hated Airline passenger duty.
Now the four leading airlines in the
British Isles have published a report by Price Waterhouse, which calls for
scrapping this ‘green’ tax. Using a model favoured by the World bank it
examines the impact of one such element can impact on other sectors of the
economy.
PWC claim that scrapping APD will stimulate
the economy, create up to 60,000 extra jobs, encourage in-bound tourism and
reduce business costs. Moreover the income lost will be made up by extra
revenue from income tax and Vat.
This APD tax has not been as lucrative as
the Chancellor had hoped. The ‘Laffer’ effect works here as well. However
George Osborne may take comfort in the fact that the fewer Brits who go abroad
aids the tourism deficit. We earn less from in- bound tourism than we spend
abroad.
And our new Visa rules make it more
difficult to attract the new middle classes from China and India. We couldn’t
even persuade more tourists to visit during the Olympics, though this may have
been a marketing blunder.
We must create conditions to kick-start our
tourism business. This means greater capacity at our airports and a better
understanding of the benefits tourism deliver to the economy.
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