Sir Rocco Forte and a host of other business leaders are protesting over the tourist tax today.
It takes quite a lot to persuade me to take to the streets. But that is exactly what will happen today, when I and other business leaders protesting about the government’s hated “tourist tax” will gather in Savile Row, one of London’s most famous shopping districts.
We will be highlighting Rishi Sunak’s decision to scrap the traditional VAT rebate on shopping by foreign tourists, which has prompted a fierce backlash from politicians from all parties, including two former Tory Chancellors, Liberal Democrat leader Sir Ed Davey and Labour Mayor of London Sadiq Khan.
Over 400 business leaders representing firms in hospitality, retail, luxury, travel, tourism and the arts have now publicly backed a campaign calling for the tax break – which existed for decades and is still available in every country in the EU – to be reinstated.
Signatories to an open letter to the Chancellor, including British Airways, Marks & Spencer, Rocco Forte Hotels, Harvey Nichols, Primark, Burberry, Heathrow, Gatwick, Victoria Beckham, the Royal Opera House, British Fashion Council, Fenwick, Kurt Geiger, Charlotte Tilbury, Gieves & Hawkes, Anderson & Sheppard, UKinbound, Tate, The Really Useful Group, Shakespeare’s Globe, Southbank Centre and Bicester Village, have pointed to mounting evidence that tourists are choosing to travel and spend in cities like Paris, Milan and Madrid rather than in the UK as a result.
Increasingly, UK shoppers are also choosing to spend overseas, with the sales tax rebates they can claim abroad covering the cost of travel.
It is not just a few luxury retailers in the West End of London that are affected, as the Prime Minister likes to claim. The entire tourist economy – and every high street in the land – is seeing the impact of lower footfall and spending from foreign visitors.
This weekend, the campaign had its biggest breakthrough to date when Business Secretary Kemi Badenoch broke ranks with the government, saying companies were raising the issue of bringing back VAT-free shopping with her “a lot” and that she was “very keen for them to know we understand the arguments that they’re making”.
Badenoch is speaking common sense and the Treasury must now shift its position. We are calling for an independent review of the current policy, which we are confident will show that reinstating the traditional VAT rebate would boost both the economy and the public finances.
The Treasury’s narrow calculations on the cost of tax-free shopping take no account of the fact that tourists spend in hotels, restaurants, theatres, museums, tourist attractions and on public transport.
Economic analysis has shown that when everything is considered in the round the tourist tax is costing the UK £10.7bn in lost GDP and two million extra foreign visitors a year spending money across the economy.
The Centre for Economics and Business Research (Cebr) found if the traditional scheme offering VAT-free shopping for tourists was restored, there would be a clear overall benefit to the public finances. For every £1 refunded in sales tax to foreign tourists, the exchequer would gain £1.56 in other taxes thanks to the dynamic economic effects of tourist expenditure.
The additional revenues generated would outweigh the losses associated with sales tax refunds by £2.3bn in 2023, the Cebr report concluded.
There would also be employment impacts. A fully utilised tax-free shopping scheme would have supported an estimated 172,000 jobs in 2022 or 201,000 in 2023.
So it is clear that scrapping the tourist tax is an enormous economic opportunity. By making shopping purchases cheaper, a tax-free shopping scheme acts as an incentive for tourists to visit the UK over other countries.
The government is visibly struggling to come up with an articulate strategy for economic growth. Here is a simple policy fix which would command enormous support and get tourist spending firing on all cylinders again.
The UK simply can’t afford to go on driving high spending foreigners into the arms of our rivals. As long as we leave the tourist tax in place, Paris, Milan and Berlin can’t believe their luck.
I’d never normally protest, but Sunak is bleeding the tourist economy dry
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01.11.2023
Sir Rocco Forte and a host of other business leaders are protesting over the tourist tax today.
It takes quite a lot to persuade me to take to the streets. But that is exactly what will happen today, when I and other business leaders protesting about the government’s hated “tourist tax” will gather in Savile Row, one of London’s most famous shopping districts.
We will be highlighting Rishi Sunak’s decision to scrap the traditional VAT rebate on shopping by foreign tourists, which has prompted a fierce backlash from politicians from all parties, including two former Tory Chancellors, Liberal Democrat leader Sir Ed Davey and Labour Mayor of London Sadiq Khan.
Over 400 business leaders representing firms in hospitality, retail, luxury, travel, tourism and the arts have now publicly backed a campaign calling for the tax break – which existed for decades and is still available in every country in the EU – to be reinstated.
Signatories to an open letter to the Chancellor, including British Airways, Marks & Spencer, Rocco........
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