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WTTC urges French Government to reconsider anti-competitive tourist taxation plans

July 10, 2014 Destination Global No Comments Email Email

Plans by the French Government to increase tourism taxes on hotel guests in France will have a detrimental effect on the long-term economic growth of France’s Travel & Tourism industry and MUST be scrapped, according to the World Travel & Tourism Council (WTTC).
“WTTC’s research shows that direct increases in taxes on tourists have the effect of deterring travel and reducing overall taxation income” explains David Scowsill, CEO & President of WTTC. “Taxes must stimulate growth, rather than thwart it. The French Government’s plans to increase the tourism tax by up to433% will inevitably prove counter-productive to the French economy”.

“Travel & Tourism is a major pillar of the French economy, which contributes to economic growth and job creation”, Mr Scowsill continues; “The industry contributes 9.5% of France’s total GDP and supports over 2.8 million jobs or 10.5% of total employment. It needs to be protected and encouraged. This punitive proposal will do the opposite “.

The World Economic Forum’s Travel & Tourism Competitiveness Report 2013 ranks France 140 out of 147 countries in terms of price competitiveness. The taxation proposal comes on the back of a rise in hotel VAT in France from 7% to 10% at the beginning of the year.  Mr Scowsill argues that the French Government is getting its priorities completely wrong; “Austerity measures in G20 countries including France took their toll on Travel & Tourism last year. With recovery in the Eurozone now underway, more Europeans should be travelling domestically and regionally this year. But the 3% VAT rise and these additional hotel taxes will only further erode France’s price competitiveness. It is completely the wrong way of going about stimulating demand. We urge the French Government to reconsider and urgently reverse the recent rise in hotel VAT and drop this latest proposal”.

According to WTTC’s Annual Economic Impact Report 2014 for France, Travel & Tourism’s direct contribution to the French economy declined by 0.2% last year but is expected to grow by 2.3% this year, outpacing overall economic growth at 0.7%. International visitor spending in France was relatively flat last year, whilst domestic expenditure fell by 0.4%.

Mr Scowsill argues that the Government should be concentrating its efforts on other policy areas such as visa facilitation, where it can increase arrivals, tourist receipts and jobs; “The private and public sector need to work together in France to ensure that the business environment is conducive to the growth of the industry; planning and investing in the appropriate infrastructure and creating a tax regime which allows the private sector to be competitive. France needs to co-ordinate its policy making and implement measures, which develop higher spending and longer stays. We applaud the Government’s decision at the beginning of the year to introduce fast-track visa applications for the Chinese, so that permits are now processed within two days, rather than the previous 3-5 days but we would encourage France to go even further. WTTC’s research* shows that visa facilitation is central to stimulating economic growth and job creation and can increase international tourist arrivals by 5-25%. WTTC would encourage France to introduce this policy for more emerging economies such as Thailand, Indonesia and India, where there is a burgeoning middle class, who are keen to travel. It is policies such as this which will help the industry, rather than taxing tourists and putting them off travelling. The French Government needs to stop viewing tourists as a revenue source and see them as a revenue generator”.

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