The Chancellor has been criticised for refusing to postpone an increase in Air Passenger Duty (APD) and for not paying heed to the Campaign for Reduced Tourism VAT which has argued policymakers should prioritise cutting VAT over Corporation Tax.
Falling in the middle of English Tourism Week, the 2013 Budget saw a raft of measures designed to boost business and spur on growth including cutting Corporation Tax in the UK to the lowest level of any major world economy.
However the Campaign for Reduced Tourism VAT, which is led by a group of bodies including the British Hospitality Association (BHA), expressed disappointment that the Chancellor had failed to follow the lead of many of his European counterparts and cut VAT for the hospitality and tourism industries.
“The Government has accepted the argument that a lower rate of Corporation Tax makes the UK more competitive internationally," said Graham Wason, chair of the campaign. "However, the Treasury’s own economic model demonstrates that reducing VAT on tourism is a better way to generate growth for the economy than reducing Corporation Tax."
Wason revealed the campaign was now planning to step up its efforts in the run-up to the next General Election in 2015.
“We’re missing out on tourists from growing markets like China and Russia because of the high VAT rate as well as our unfriendly visa regime," he continued.
"Cutting the VAT rate for tourism to 5 per cent will allow us to compete effectively with our international rivals, boost growth and deliver the Olympic legacy. The Government is squandering its golden opportunity to create the right business environment for the tourism sector and the whole economy.”
Osborne also felt the wrath of the airline industry in the aftermath of Wednesday's speech. Tourism and aviation industry professionals had been keeping their fingers crossed that the Chancellor would abandon a planned rise in APD for next month.
However they were not in luck and on April 1 a £2 increase in duty on economy long-haul flights will come into force. The fear is high VAT, a tricky Visa system and higher air fares as result of this APD rise will all hit UK tourism and the hospitality businesses which rely on tourist spend.
It is a fear which was vocalised by Steve Lowy, founder of Umi Hotels, who told BigHospitality London was in danger of losing its hub status which would have a knock-on effect on the UK hospitality industry.
Airline chiefs slammed the decision not to cut APD which it said would have actually had a positive impact on GDP.
Dale Keller, chief executive of the Board of Airline Representatives, said the Chancellor had put 'beer ahead of aviation'.
"Just because the industry was fully expecting a slap in the face from the Treasury does not make it any more palatable," he said. "The Government has built a veritable wall of tax around the UK which international travellers and airlines are increasingly overflying," he warned.