An extra 2,600 jobs could be created by a cut in tourism VAT in Northern Ireland, campaigners have claimed.
They said the industry is relatively underdeveloped and the benefit could be disproportionately high.
The Cut Tourism VAT lobby group, which is supported by major hoteliers, gave evidence to a parliamentary inquiry probing how to promote the industry through the tax system.
Economic adviser Graham Wason said: “There will be winners and losers. Northern Ireland has the potential to gain well above average in terms of the UK but we have not done any analysis to underpin that.
“The case for reduced VAT in accommodation and attractions is highly compelling and will correct this disparity with the rest of the UK.”
The industry is worth more than £750 million to the local economy and is responsible for 43,000 jobs.
The Northern Ireland Affairs Committee of MPs is considering how the Government can support a sector facing stiff competition from the Republic where a lower rate of VAT is imposed.
It wants to explore whether the UK’s 20% VAT rate is putting businesses at a competitive disadvantage, especially when compared with those in the Republic of Ireland.
The inquiry will investigate the impact in other countries that have implemented a reduced rate in their tourism and hospitality sectors and what effect the Republic’s 9% VAT rate on tourism had.
The Cut Tourism VAT organisation is UK-wide and is supported by groups including Hilton Worldwide, Jurys Inn, Travelodge Hotels and Merlin Entertainments.
Mr Wason said a tax reduction would enhance competitiveness. He claimed the Government could consider other areas permitted by EU rules where the reduction could be extended.
He added there was a compelling argument that sports events should enjoy a reduced VAT rate.
Mr Wason added: “That figure of 2,600 (jobs) is not based on a detailed analysis of coming to Northern Ireland and undertaking a competitiveness study.”
It was calculated by taking the overall impact for the whole of the UK and apportioning that in accordance with what currently exists.