Perth and Kinross Council could become the first authority in the country to publicly call for VAT to be slashed on restaurants, hotels and arts venues.
The move could be a game-changer for the area’s tourism sector, help stimulate the economy and create jobs across the region.
Next week, local authority leaders will be urged to write to Chancellor of the Exchequer Phillip Hammond and call for the standard level of VAT to be reduced for tourism-related businesses.
It follows the launch of the national Cut Tourism VAT campaign, which has growing support from cross-party politicians.
A motion to be raised in Perth on Wednesday by Conservative councillor Callum Purves will stress the current rate of 20% is having “a detrimental effect on the local tourism sector”.
He said:Â “There are only three countries in the European Union that have VAT on tourism-related products such as entertainment and hotels at the normal level of 20%.
“Other countries have set their levels at much lower, at 10% or 5%.
“For a place like Perth and Kinross, where tourism accounts for 12% of the economy, cutting VAT would create a big economic stimulus to create more jobs and help grow the local economy.
“Obviously, there will be a cost of cutting tourism to the government, but it is expected that this would be recovered in just a few years because the revenue would be higher.”
Mr Purves welcomed the council’s decision earlier this year not to adopt a tourism tax like the one proposed for Edinburgh.
“For a largely rural economic like Perth and Kinross where you don’t have the big name hotel chains like you do in, say, Edinburgh and Glasgow, an extra £2 on a stay could have a significant negative impact.
“So ruling out a tourism tax is a great step, but supporting a cut on tourism VAT would be a great step further.”
The motion was supported “wholeheartedly” on Thursday by Crieff Hydro boss Stephen Leckie, who is chair of the Scottish Tourism Alliance.
“We pay the second highest VAT in Europe, only Latvia is more expensive,” he said.
“A move like this would help to offset the rising costs of doing business.
“Everyone has a role to play in tourism and if we can’t reinvest because we aren’t making the profits then the businesses lose out and everyone loses out.
“The whole industry will support this motion.”
Campaign director at Cut Tourism VAT, Jack Irvine said it was “excellent news” that this issue was being raised by Perth and Kinross Council.
He confirmed, if approved, it would be Scottish council to formally endorse the movement.
“According to research commissioned by Cut Tourism VAT, in the first 10 years a reduction in tourism VAT to the 5% level would create over 130,000 jobs and would see the exchequer’s accounts increase by £5.27 billion,” he said.
“This shows the benefit both to the tourism industry and the wider economy, and highlights the necessity of a reduction in the rate of tourism VAT.”
