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WTTC talks tough on taxes

Pointing out the important role that the tourism industry plays in stimulating economic growth and in creating jobs, the World Travel & Tourism Council (WTTC) is urging European Union (EU) finance ministers to avoid making “unproductive knee-jerk tax hikes at a time of austerity.” In a letter to all 27 EU finance ministers, WTTC chairman, Dr Michael Frenzel reminded them that travel and tourism is a key generator of employment across the European Union directly generating 10 million jobs across Europe, substantially more than the automotive manufacturing (3.2 million), mining (3.6 million) and financial services sectors (8.5 million). Dr. Frenzel, who is also th chairman of TUI AG, said that: “Given the labour intensity of travel & tourism, and as the above data shows, travel & tourism is one of the few economic sectors which can generate economic growth with jobs.” He also pointed out in the letter that: “Travel & Tourism is seen as a “cash cow,” an “easy source” for generating quick money through new or expanded taxation. However, the evidence suggests that taxing tourism does not reap benefits.” In fact, WTTC research reveals that the UK’s Air Passenger Duty costs the UK economy 4.2 billion pounds 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. There, the Euro 300million earned in tax revenues was negated by the cost of Euro1.2 billion to the economy as passengers used alternative airports in neighbouring countries The Irish Air travel tax of Ç10 per person was reduced to Ç3 per person following a 2 million decrease in travellers to Ireland over 3 years In Germany the reduction of VAT from 19% to 7% 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%, and the number of unemployed persons has dropped significantly more than in other sectors The WTTC points out that simple measures can be taken to stimulate travel & tourism, increase visitor revenue and therefore jobs. For example, a recent study by WTTC and the World Tourism Organization showed how improvements in visa policies in G20 countries could increase travel & tourism employment by an additional 5 million jobs over three years and generate an additional US$206 billion in tourism exports. Go to http://www.wttc.org for more.

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