The luxury goods sector has made a fresh plea for the government to urgently reinstate VAT-free shopping, after it warned the UK can no longer afford to remain “uncompetitive” and said the tourist tax is hurting business.
In the latest of growing calls for the return of tax-free shopping for overseas tourists, trade body Walpole’s chief executive Helen Brocklebank said: “The Government has asked for evidence, now it must listen to what businesses have to say.”
She said: “The case for ending the tourist tax grows daily, and the UK can no longer afford to remain uncompetitive. It’s not only retailers that are bearing the brunt; our world class theatres and cultural institutions are suffering too.”
Brocklebank said bringing back a VAT refund “would be a pro-growth policy”.
Pressure is mounting on the Government to reintroduce the measure, which was axed in early 2021 making purchases in the UK 20% more costly for international visitors.
Scores of retailers have raised concerns, including Burberry which sounded the alarm about the tourist tax diverting vital spending away from its London stores to Paris. Mulberry’s chief executive said “there is no doubt” the bag maker’s UK performance has been impacted.
The latest comments from Walpole’s Brocklebank came after her organisation surveyed members on behalf of the Standard about business in the six months to June 30. The respondents work in sectors such as fashion and hospitality, and many have a significant presence in London.
Of the 21 that participated 67% said trade in the first half was worse than expected, and of those all said they would attribute that to the loss of tax-free shopping.
While the responses only cover a small part of Walpole‘s 250 members, the message will pile further pressure on the Prime Minister and Chancellor to rethink the decision on VAT.
An HM Treasury spokesman said “VAT-free shopping does not directly benefit Brits.
He added: “The scheme could cost British taxpayers around £2 billion a year at a time when we’ve already had to take difficult decisions to get debt falling and fewer than one in ten non-EU visitors used the previous scheme, showing it’s not a significant attraction for tourists.”
