Tourist tax cost the Treasury £200m last year
What’s missing: Chancellor Jeremy Hunt
According to new estimates, the Treasury lost out on more than £200 million last year because it scrapped VAT-free shopping.
The controversial ‘tourist tax’ will cost UK retailers £1.5 billion in lost sales by 2022, the Association of International Retail (AIR) said in evidence sent to Chancellor Jeremy Hunt in a bid to have the policy reviewed.
The AIR and retailers are calling for a review of the tax, claiming the Treasury has failed to take into account the impact it would have on other parts of the tourism sector, such as hotels, restaurants and theaters, used by tourists used in Great Britain. on shopping pleasure.
If tax-free shopping had not been abolished, the AIR estimates that the Treasury would have raised £459 million – £206 million more than it actually raised – because tourists spent less. The figures will increase pressure on Hunt to launch a review of the measure in his autumn statement later this month.
The Mail has led a campaign calling for the tax to be scrapped. It is supported by more than 400 companies including Burberry, Harrods, Marks & Spencer, Jimmy Choo and Heathrow Airport.
VAT-free shopping allows travelers who buy items in Britain to reclaim VAT when they return home.
Britain scrapped the stimulus in 2021. It was briefly reintroduced in Liz Truss’s disastrous mini-budget, before being scrapped again when Rishi Sunak became prime minister. Earlier this month, a collection of luxury retailers protested on London’s Savile Row against the tax, which the industry warns has sent foreign tourists to Paris and Milan instead of shopping centers in Britain.
Paul Barnes, CEO of the AIR, said: ‘Britain needs growth, so it is madness to throw away the unique opportunity to create a whole new multi-billion pound tourism market for the whole of Britain.
‘With all this new evidence, we hope the Government will now seize the opportunity to make Britain the best place in the world for international shopping.’
A Treasury spokesman said VAT-free shopping ‘does not directly benefit the British’.
He added: ‘There is evidence that the main drivers for tourists visiting Britain are our rich history and heritage, and vibrant towns and cities – not shopping.’