Tourist attraction: Jeremy Hunt is being urged to reinstate tax-free shopping for international visitors
(Picture: PA Wire)Chancellor Jeremy Hunt has been urged to reconsider reintroducing tax-free shopping for international tourists to boost London’s retail trade.
Mayor Sadiq Khan said scrapping VAT on purchases by foreign visitors would “provide a much-needed boost to London’s retail and hospitality sectors at a time they need it most”.
The perk, which costs the Treasury about £2bn a year in foregone VAT but which acts as an incentive to visit the capital, was reinstated in Kwasi Kwarteng’s calamitous mini budget but quickly axed by Mr Hunt as he attempted to restore the Treasury’s finances this week.
Mr Khan, in a letter to Mr Hunt ahead of the October 31 Autumn fiscal statement, said there would be wider benefits to the UK the perk were restored.
He said: “While much tax-free shopping takes place in London, the negative impact will also be felt across the UK with over 20 per cent of the annual £3.5 billion tax-free sales usually made outside of the capital.
“The Government should be looking for ways to secure London’s status and reputation as a global city that is open to visitors and investment. I would urge you to reconsider this decision in the medium term.”
Earlier this week, travel trade experts said the removal of tax-free shopping was a “straightforward disaster for London” and would encourage wealthy travellers to visit rival cities such as Paris and Milan instead.
In the letter, Mr Khan urged support for “vulnerable Londoners who are struggling now” due to the cost of living crisis and pressed the case for investment in shelved projects such as the Bakerloo line extension.
He said he had applied for six areas of the capital to become investment zones – the western section of Old Oak Common, the Upper Lea Valley, the area around the Royal Docks, Euston, the London Riverside area around Barking and Croydon town centre.
Mr Khan also urged the chancellor to impose a “windfall tax on energy producers” rather tham impose cuts to public spending.
