Oral question asked in the House of Lords, by Lord Hannan of Kingsclere (Conservative). It was answered on Wednesday, 24 May 2023.

Tourist Spending: VAT

Question: My Lords, there seems to be a discrepancy between the Treasury figures quoted by my noble friend the Minister and almost every independent survey, including the one referred to by the noble Earl, Lord Clancarty. There is a persistent pattern of the Treasury refusing to take into account the secondary, more dynamic impact of taxes—the way in which lower rates can generate more economic activity. Does my noble friend the Minister think that it might be time to revise the way in which the Treasury does these forecasts, to take account of our observed experience?

Answer: As I have said to noble Lords, the Treasury took into account a wide range of information when reaching its decision. Indeed, the Treasury was judicially reviewed on the decision to withdraw the VAT RES scheme in Great Britain and successfully defended it, with the judge noting the thorough government analysis. As more evidence and data emerge in this area, we will of course keep it all under review.

Secondary information