As published in the Daily Mail:
Rishi Sunak last night faced a growing clamour to scrap the VAT ‘stealth tax’ on Covid travel tests.
MPs, campaigners and travel chiefs all urged the Chancellor to immediately axe the levy, which adds 20 per cent to what is already described as a ‘rip-off’ fee.
Critics said the tax was not only pricing ordinary families out of foreign holidays, but also damaging the economy by stifling the rebound of the UK’s beleaguered travel industry.
Yesterday, the Daily Mail launched a campaign calling on ministers to deliver on their pledge to reduce the price of travel testing in time for peak summer holiday season.
Many have complained that the exorbitant cost of Covid testing, which is required when we travel abroad under the ‘traffic light’ quarantine system, can add hundreds of pounds to the price of the average family holiday.
As a starting point, the travel industry is demanding that the Treasury scrap VAT on the tests.
Last night, there was growing fury at the Treasury’s refusal to act.
Officials have claimed that they could not scrap the levy on testing without having to raise taxes elsewhere. Critics immediately pointed out that ministers could not possibly be relying on revenues from the tax because it has only started bringing in money in the past few months.
Meanwhile, ministers were unable to point to any progress they had made on the Government’s pledge to cut costs yesterday.
Earlier this month, 17 Tory MPs wrote to the Chancellor to call for a VAT cut for tests.
Yesterday, they repeated their demands as they criticised the ‘counter-productive’ system that was making flights the ‘preserve of the rich’.
Tory MP Henry Smith, chairman of the all-party Future of Aviation group of MPs and a signatory to the letter, said: ‘They know that aviation is a major economic enabler that will be central to our economic recovery so it is counter-productive to allow our sky-high testing costs to remain a barrier to international travel.’
Ex-minister David Davis said: ‘The Government should do everything it can to incentivise people to liberalise the economy. They should certainly look at scrapping VAT as a way of mitigating the costs of the restrictions they’ve put on people, and a way of making things safer.’
Sir Graham Brady, lead author of the letter and chairman of the Tory backbench committee, lent his support to the Mail’s campaign, adding: ‘As we approach the summer holidays, it must be a priority to ensure that travel does not become the preserve of the rich.’
Several travel chiefs also intervened. Heathrow Airport chief John Holland-Kaye said: ‘The Daily Mail’s campaign for cheaper Covid tests is exactly the type of thing the aviation and tourism industry needs.
‘A lot of progress to reduce the cost of Covid tests has already been made by industry, and now it’s time for ministers to step up and do their part.’
He called for VAT to be scrapped and for the use of lateral flow tests for arrivals from low risk countries, instead of the more expensive PCR tests.
Tim Alderslade, CEO of trade body Airlines UK, said: ‘This is not a revenue line that has been on the Treasury scorecard for years and years, it’s a classic stealth tax that has been imposed since Covid hit.’
A Government spokesman said officials were working with the travel industry and private testing providers to see how they can further reduce the cost of travel.