Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, if he will assess the effect on the economy in Northern Ireland of the Irish government's decision to retain a reduced rate of sales tax for the tourism industry.

Latest statistics show that tourism expenditure associated with overnight trips in Northern Ireland has increased by 9 per cent over the last 12 months.

The Treasury has previously considered the impact of a VAT cut for the UK tourism sector on growth and jobs. The conclusion the Government reached is that a VAT cut would not produce sufficient economic growth to outweigh the revenue shortfall. A VAT cut for this sector would therefore need to be funded either by additional borrowing or by raising other taxes, both of which are likely to have a negative effect on the economy. The Government therefore have no plans to introduce a VAT cut for this sector.

Under EU law it is not possible to introduce a specific VAT rate for Northern Ireland that differs from that applied in the rest of the UK.