Britain floundering as tourist tax bites: Calls for Chancellor to take action

European countries are reaping the rewards of duty-free shopping for tourists, while the UK is missing out, new statistics show – a renewed call for Chancellor Jeremy Hunt to take urgent action.

London is floundering thanks to tourist taxes, while rival cities in France, Portugal and Italy have seen their pandemic recovery driven by visitors flocking back to buy luxury goods.

According to data from retail technology company Planet, European sales through refund schemes are moving closer to a pre-pandemic peak, after rising 10 percent in May from the previous month.

It means that duty-free sales in Europe are only 14 percent lower than in May 2019.

This represents the best month for retailers on the continent since the end of the pandemic.

And the UK will score an own goal this summer as American and Chinese tourists return to the continent with cash to spend on expensive goods abroad.

There was a 27 percent increase in the amount US tourists spend on European retailers in May compared to April as the summer tourism season gets into full swing.

This means sales to customers in the US are now 71 percent above pre-pandemic levels and 83 percent higher for the year to date – but they are taking their custom to other countries and avoiding the UK.

Duty-free sales of luxury products to international visitors surpassed pre-Covid levels in France last month, with Portugal also recovering to 2019 levels.

While European retailers look forward to the prospect of further summer growth – as US and Chinese visitors continue to spend across the continent – UK retailers remain disadvantaged by the lack of a Tax-Free shopping scheme, meaning they are not competing on a level playing field said Luca Cassina, president of retail at Planet.

It’s because London is in danger of losing its status as a tourist’s premier destination for shopping, putting a wider ecosystem of hotels, restaurants and cultural gems at risk.

More than 300 business leaders have backed The Mail’s ‘Scrap The Tourist Tax’ campaign, launched to echo industry pleas for the government to change its stance.

Mulberry boss Thierry Andretta also joined in the criticism of the levy, saying last week there was “no doubt” that the tourist tax had depressed sales in the UK while shops in European capitals were booming.

It came after the company sounded the alarm about the policy when it announced it would close its flagship store in Bond St in February, which had seen a ‘dramatic downturn’ in trade since the tax was introduced.

Critics say that – far from the Treasury’s claim that abolishing the tourist tax would cost £2bn a year – there would be a net gain of around £350m.

A spokesman for the Treasury said: ‘We are supporting major retailers by reducing corporate rate bills by 75 per cent and effectively reducing corporate tax by £27bn through full spend.’