The World Travel & Tourism Council (WTTC) has written to all 27 Finance Ministers in the European Union urging them to recognise the important role of the industry in stimulating economic growth and jobs, while avoiding unproductive knee-jerk tax hikes at a time of austerity.
The letter, written by Dr Michael Frenzel, Chairman of the Executive Board, TUI AG and Chairman, WTTC and David Scowsill, President & CEO, WTTC, reminds Finance Ministers that Travel & 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).
‘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,’ the letter says.
“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:
- Recent research by WTTC shows that the UK’s Air Passenger Duty costs the UK economy £4.2 billion 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. The Euro300m 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 €10 per person was reduced to €3 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
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 Organisation 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. This research was presented to the G20 world leaders by President Calderón at the G20 meeting at Los Cabos in June.