A call has been made for a “bold” cut in VAT on domestic tourism from 20 per cent to five per cent as part of a major plan to save the sector hit hard by the Covid crisis.
Isles MP Alistair Carmichael says the hospitality industry is among the hardest hit by social distancing policies.
He has highlighted reports indicating that 80 per cent of workers in the hotel and food industries are furloughed and up to a third may be at risk long term of losing their jobs.
According to figures from Visit Britain, there will be 22 million fewer visitors to the UK this year.
The demand follows a similar call from Tory MSP Jamie Halcro Johnston, who this weekend called on the Scottish government to fund a campaign to support hospitality and tourism.
Mr Carmichael said: “In the Northern Isles and across Scotland, local hotels, B&Bs and tourist attractions play a vital role in our communities.
“With most of the summer already gone and many people still anxious about travel, these businesses face the prospect of ‘three winters in a row’.
“Furloughed workers have some security now but the potential for job losses in the immediate aftermath of the crisis is severe.
“Scottish Liberal Democrats believe that our vital tourism businesses deserve a bold VAT cut – as a sensible investment to ensure future success.
“The Chancellor should make this reduction as part of a comprehensive package of measures to tackle the growing economic crisis.
“At the moment people in the UK are being taxed harder than almost anyone else in Europe for simply supporting local tourism. This simply doesn’t make sense.
“Alongside a targeted extension of the Coronavirus Job Retention Scheme specifically for those unable to reopen, this VAT cut would give tourism and hospitality a crucial boost.”