VAT increase on lodging remains uncertain

The proposed VAT increase on accommodation continues to hang over our industry like a dark cloud. While sports, culture and media seem to escape under pressure from the Lower House, and despite critical noises from the sector, society and politicians alike, the cabinet is sticking to its plans. In the coming weeks, Koninklijke Horeca Nederland will continue to provide First Chamber members with arguments to convince them that the cabinet should also look for alternative solutions for the VAT increase on accommodation. At the very least, an impact assessment should start being done.

For hoteliers, the uncertainty surrounding the measure remains cause for concern, especially now that no reprieve has been negotiated for our industry in the House of Representatives. In the previous edition of Hotelvak, we predicted that it would be a lobby of the long haul. And that turns out to be true.

For hoteliers, the VAT increase means a cost increase that they have to pass on, making the Netherlands less attractive to domestic and foreign tourists. This affects not only hotels themselves, but also related sectors such as restaurants, shops and cultural institutions. And that while the plan is not going to have the desired effect. The cabinet sees the VAT increase as a way to strengthen public finances, but research by ABN Amro sector economist Stef Driessen (see previous pages) shows that the measure is likely to do more harm than good. This is one of the points we continue to stress in discussions with members of the Senate.

There has been criticism from the Senate about the way the VAT increase has been included in the Tax Plan. Several Upper House members feel that a proposal with so much impact should be dealt with separately, rather than as part of a whole package. They question whether the economic impact of the VAT increase has been sufficiently researched. They also doubt whether it is wise to introduce the measure now, while many businesses are still recovering. Not only the Senate makes this criticism, the Council of State also holds this view.

Despite the fact that the Lower House passed a motion on 14 November calling on the cabinet to find alternatives to the VAT increase on sports, culture and media, this is not yet the case for the VAT increase on accommodation. KHN is hugely disappointed that the cabinet and the Lower House want to push through the VAT increase on hotel stays from 9% to 21%.So we are turning our attention to the Upper House in the coming period.

In recent months, we as KHN, together with the culture, sports, events, media and book sector, have been campaigning against the government's VAT plans. Since Budget Day, the opposition in both the Lower and Upper Houses of Parliament has firmly objected to these plans. So for sports, culture and media, this joint lobbying has borne fruit. For our industry, however, it has not yet. This is extra sour because a VAT increase on accommodation not only affects the hotel industry, but also other sectors. Higher prices in hotels could lead to families going away for a weekend less often and thus using other facilities less. In fact, hundreds of thousands of families and young people will no longer be able to go on holiday at all. And all this while going out is so important. We will continue to highlight this message through public campaigns and conversations with policymakers to ensure that both politicians and the public understand what is really at stake.

Although final decisions have yet to be made, the VAT increase remains a major issue in the coming period. In all likelihood, the votes in the Senate will take place on 17 December. KHN is closely following these developments and remains committed to ensuring that the interests of the hotel sector are not lost sight of.

What we are going to do anyway is continue to provide the Senate members with the arguments to convince them that the government should look for alternative solutions for the VAT increase on lodging as well. At the very least, an impact assessment should be done. That will show how hard the sector will be hit and how little the measure will yield. We have contacts and agreements with senators from the Senate. But we also continue to take action.

We will not give up until the King signs off on the bill!