The European Tour Operators Association says tax levels need to change if the UK is to substantially increase its inbound tourism.
And it recommends that the UK join the Schengen visa scheme to “double our income from newer markets.”
ETOA, which has just over 200 UK members including tour operators, hoteliers and attractions, has drawn up recommendations for boosting inbound tourism.
Its comments come in response to prime minster David Cameron’s speech last week in which he said he wanted to see the UK in the top five tourist destinations in the world.
The organisation says tourism should have higher status in government and be “at the very least a key portfolio in the Department for Business”. It also attacked cuts on VisitBritain’s promotional budget.
But its greatest concerns are over tax.
Executive director Tom Jenkins said: “VAT should not apply to exports. Tourism is an export but the creation of holidays in the UK for visitors from abroad is subject to VAT – that’s clearly disadvantageous to tourism exports.
“However, the creation of holidays for UK residents outside the EU is free of VAT – the VAT regime is insane because there is a massive tax incentive to holiday abroad. This urgently needs to be changed.
“On top of this UK VAT levels on tourism are more than double the European average.”
He said APD rises scheduled for November 1 are another big financial disincentive.
“A family of four coming from Australia, a core origin market, travelling in economy will have to pay £120 in new tax - up from £220 to £340.
“Two years ago APD for the same family was £160 for economy and £320 for all other classes of travel, in other words there has been an increase of over 100%.”
Visas, charged at £68 with forms to be filled out in English, were also uncompetitive it said and the UK should join the Schengen system.
“Anyone buying a Schengen visa (at a cost of €60) gets 25 countries to visit. If we could accept that visa, then we could start to double our income from newer markets.”
ETOA also said that focusing on the Olympics was misguided as a tourism promotion strategy because “people attending the Games don’t act like other tourists and there is very clear evidence that hosting the Olympics in fact stalls tourism growth.