Memorandum submitted by MSc Students in
Toursim Management, Leeds Metropolitan University
1. Cheap flights operating in and out of UK
regional airports can be used both by British residents to travel
abroad and by international visitors to travel to the UK. They
create opportunities for international visitors to travel directly
to Britain's regions, bypassing London. This is a potential positive
advantage of cheap flights providing an opportunity to encourage
visits to the regions, recognise cultural diversity and contribute
to urban and rural regeneration.
— The cost of internal transportation
within the UK is a deterrent to domestic tourism and it is often
cheaper to fly abroad than to drive or go by coach or train to
a tourism destination in the UK. For the same reason international
arrivals on cheap flights are unlikely to travel far in the UK.
However, the comparative cost advantage consequent on untaxed
fuel distorts the functioning of the domestic transport market
in the UK with undesirable environmental impacts.
— There is a need to develop the destination
infrastructure at regional airports—bus and rail links,
and service infrastructure. There is presently a reputational
risk for the UK as a whole posed by the poor facilities and transport
links at some regional airports. There is a need to develop regional
tourism strategies to make the most of the cheap flights recognising
that they may environmentally unsustainable in the medium term.
— There is insufficient research on
the way cheap flights are being used for inbound and outbound
tourism and for domestic and international travel.
3. Regional tourism organisations are under
increasing pressure to increase the level of funding for promotion
and other tourism functions which they secure from the private
sector. Match funding distorts the public interest in spreading
tourism benefits. Match funding essentially means that public
resources are being used to benefit those organisations and businesses
which are capable of funding their own marketing—it amounts
to a public subsidy for marketing which would otherwise be funded
by the businesses themselves. The need to find match funding distorts
the priorities of these public organisations away from assisting
with the marketing of SMMEs, community projects, sustainable tourism
priorities and spreading benefits. This policy imperative perpetuates
unsustainability and makes it difficult to support emerging businesses
and those in the less favoured parts of Britain, including London
boroughs outside of Westminster, Greenwich, Kensington and Chelsea
and the City.
4. Taxation:
— That tourists can claim back VAT
appears to us to be inexplicable. It amounts to a subsidy on expenditure
by tourists in Britain and encourages goods to be shipped from
New York to London where the VAT can be claimed back by an American
visitor, the same visitor imports the goods purchased in London
back to New York and pays tax on the imports, meaning that the
Britain has foregone tax revenue to benefit the foreign consumer
and the tax regime in the originating market. In the modern world
it is irrational to subsidise consumption unless the goods are
locally produced. Sales of Prada shoes in London are not genuine
exports. We recommend that the committee looks into how much companies
like Global Refund Ltd make from refunding VAT.
— APD was introduced hastily and without
due consideration for the consequences of the tax. It appears
that the Chancellor saw an opportunity to raise taxation and took
it without thinking through the implications. The tax distorts
competition benefiting sun, sand and sea destinations which are
short haul over those like The Gambia and the Caribbean which
are long haul—although they are in direct competition. It
is still possible to "buy" free flights, paying only
the taxes. APD means that foreign visitors are forced to contribute
to general government expenditure, and may well feel that they
do not wish to contribute to some elements of UK government expenditure.
APD is no more than an additional revenue stream for the Treasury.
— There is a strong case for an environmental
tax on air travel; one designed to create incentives for more
efficient use of fuel by airlines and to ensure that passengers
pay a price a good deal closer to the real cost of their flight
including the externalities of GHG and noise pollution. This is
best achieved by a fuel tax. The revenue from tax on aircraft
fuel should be hypothecated for GHG reduction programmes in the
UK and the destinations people are flying to. Fuel duty and the
removal of other subsidies would assist in creating a more rational
transport market in the UK, a market in which individuals securing
for themselves the best possible deal do not find it cheaper to
fly to Scotland than to go by rail or coach. Given that half the
UK population does not fly in any given year the public subsidy
of air travel is regressive. Revenues for aviation fuel tax could
also be used to fund an integrated public transport system which
could contribute significantly to GHG emissions
— On equity grounds there is a strong
case for Bed Night Tax and in principle it should be supported,
tourists are currently freeloaders on the local public services
which they use—it is equitable that they should make a contribution
when they sleep in the area. In the USA a number of cities use
a bed tax (New Orleans 4%, Atlanta 7%, DC 14.5% and NYC 21.25%)
to fund regeneration and major projects. In The Gambia government
collects a £5 per head arrivals tax, 75% of which goes to
public infrastructure development for tourism. However, in the
UK it is important that the tax is quoted in the room rate and
that it does not come as a nasty surprise when people go to settle
their bill. If a varied tax is added to the bill it will cause
considerable confusion and antagonism and risks damaging the industry.
There is also scope for abuse when tax is collected on undeclared
rooms and is not remitted to government.
5. Government policy needs to be informed by
tourist spend, it is spending which benefits the economy, not
arrivals per se. If government is to adequately manage tourism
and to ensure its sustainability then measures of the environmental,
social and economic impact in different communities and by type
of tourism are essential.
6. UK residents need to be encouraged to holiday
in the UK in order to reduce GHG emissions and holidaymakers here
need to be managed by other government departments in order to
reduce the environmental footprint of hotels and other forms of
accommodation, electricity consumption, waste and transport. Working
with local government to manage the negative and positive impacts
of tourism, reducing the forms and increasing the latter, are
an important priority in the UK .
March 2007
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