Sweden claims restaurant VAT cut creates jobs
- Mar 8, 2014 | Richard Asquith
As a number of countries review tourism VAT subsidies, a tourism trade association has claimed that the reduced Swedish VAT rate on restaurants has been a job-creation success, but largely for immigrant workers
Does reduced tourism VAT create jobs?
Sweden cut its restaurant VAT rate to 12% in 2012 from the standard rate of 25%. It has now claimed that this led to a 9% rise in employment in the sector (Statistics Sweden). It raised employment by over 8,000 in restaurants in recent years. However, controversially, about 30% of this rise went to non-Swedish born nationals.
The statistics have been produced by Visita, the restaurant industry body, and are designed to counter proposals from the opposition left party to withdraw the concession if it wins power.
Greece cut its tourism VAT rate from 23% to 13% in 2013 with the backing of the bail-out partners (IMF, EC and ECB). But Portugal was blocked from a similar cut when it applied as there is limited proof of VAT subsidies helping stimulate enough employment to meet the loss in revenues.
The UK is almost alone in charging its full standard rate of 20%, and recently rejected a cut in UK tourism VAT rate - Ireland charges 9.5% tourism VAT and France 10% since 2014.
