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Daily Record
Daily Record
Politics
Chris McCall

Nicola Sturgeon 'won't dictate' if hospitality businesses in Scotland should pass on VAT cut to customers

Nicola Sturgeon has said it's up to individual hospitality businesses to decide whether or not to pass on a VAT cut to customers.

Chancellor Rishi Sunak announced a cut in value added tax last week from 20% to 5% in an effort to boost the sector, after more than 80% of hospitality firms ceased trading due to lockdown.

The new rate, which took effect yesterday and runs until January 12, is for food and non-alcoholic beverages in restaurants, cafes and pubs as well as hotel accommodation and certain tourist attractions.

Big name chains such as Starbucks and McDonald's have confirmed they will pass on the cut - but there are fears smaller businesses may not be able to afford it.

The First Minister was asked about hotels in Scotland coming under pressure from guests to pass on the cut.

Speaking at her media briefing in Edinburgh, the SNP leader said she was "not going to dictate" how individual businesses respond.

"The VAT reduction the chancellor announced last week for tourism and hospitality is designed very much to support businesses through a difficult period when their trading conditions continue to be limited," she said.

"As customers and consumers, where we can, we should try to find ways to support particularly local businesses - shopping locally if you haven't done that before and going on holiday in Scotland."

Economy secretary Fiona Hyslop said the second highest cut in VAT in Europe was very welcome.But she added that while individual businesses should make their own decision, it was important that Scotland retained a sustainable tourism industry in the years ahead.

Paul Johnson, director at the Institute for Fiscal Studies, added that it might have been better to wait before cutting the tax.

He told Sky News : "Maybe it would have been better to wait until we know whether the real problem is on the demand side - people need to be encouraged to go out and eat - or on the supply side - with social distancing restaurants can't serve enough people."

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