ARUN councillors refused to back a national campaign to reduce VAT imposed on tourism businesses last week.
Liberal Democrats urged colleagues to sign up to the campaign, backed by industry giants including Butlin’s.
They argued lobbying the Government to cut VAT by 15 per cent, alongside other EU countries, would boost jobs and encourage investment in Arun.
But Conservative councillors vetoed the motion, casting doubt over the economics of the proposal.
Lib Dem councillor Dan Purchese said: “We want to take positive action to boost our local economy make a tax cut which directly and indirectly benefits local tourism, by following what most of EU countries have done.”
Mr Purchese cited an analysis by Nevin Associates in favour of his motion, which claimed Bognor Regis and Littlehampton would see a £6.8million boost to its local economy, alongside the creation of at least 184 jobs.
He wanted Arun chief executive Nigel Lynn to write to the chancellor, George Osborne, to lobby for a reduction.
But it was the cost of the reduction which put many Tories off.
Leader Gill Brown said she supported tourism but could not back a proposal which would have a significant effect on the Exchequer.
Conservative backbencher Trevor Bence questioned whether a VAT reduction would lead to greater investment or boost profits for large tourism companies.
Others claimed Lib Dem policy was confused, with councillor Paul Dendle highlighting concern over the campaign expressed by a senior Lib Dem analyst. Councillor Ricky Bower noted the party’s London mayoral candidate, Caroline Pidgeon, had a conflicting ‘tourist tax’ policy.
But the Lib Dems hit back, stating Worthing West MP Sir Peter Bottomley had signed an Early Day Motion calling for a reduction, while the industry leaders were part if the growing campaign.
Tory Phil Hitchins said he was ‘100 per cent in favour of cutting taxes’ but asked where the money would come from.
Lib Dem deputy leader Dr James Walsh poured scorn on the suggestion, highlighting how Mr Hitchins had moments earlier backed a 3.1 per cent council tax increase.
The motion, debated by full council last Wednesday fell by 23 votes to 13, with six abstentions.
According to the Cut Tourism Tax campaign, it has the backing of 135 MPs.