News, Trends and Analysis of The UK Watch Industry
Daily Mail launches campaign to scrap the tourist tax
“Time to scrap the ‘Tourist Tax’ and get Britain booming again,” screamed the Daily Mail from its front page on Monday as it launched a campaign to reinstate rebates for VAT paid by overseas visitors.
“Time to scrap the ‘Tourist Tax’ and get Britain booming again,” screamed the Daily Mail from its front page on Monday as it launched a campaign to reinstate rebates for VAT paid by overseas visitors.
The issue is nothing new.
Boris Johnson’s government axed the instant rebate scheme, which allowed visitors to instantly reclaim 20% VAT on goods as they left the UK, as part of the Brexit agreement of January 2020.
It means shopping on the continent, where countries continue to offer VAT rebates, is 20% cheaper than in the UK.
Even British shoppers can hop over to cities in Europe to shop for high value goods like luxury watches and enjoy the saving.
VAT rebates were set to be reintroduced by the short-lived government under Liz Truss as a way of stimulating the economy, but the idea was abandoned by Rishi Sunak when he took office.
Retailers including Watches of Switzerland Group have been lobbying government to have the rebates reinstated for months, and made their case ahead of the spring budget.
But a Treasury spokesperson back in February rejected the calls, stating: “Introducing a wide-ranging VAT-free shopping scheme would come at too high of a cost, as has been supported by previous estimates from the Office for Budget Responsibility.”
The campaign has been taken up a notch by the Daily Mail, which published research showing that reinstating the rebate would bring in an additional £4,1 billion to the UK economy.
They quote a letter sent to the Chancellor, signed by 90 leaders in retail, hospitality and tourism warns removing the VAT refund for visitors has been an ‘extraordinary own goal’.
CEOs and business owners all argue that any lost revenue from the tourist tax is outweighed by the enormous benefits of encouraging more visitors to Britain, not just to retail, but to the hospitality, transport and entertainment sector.
“Every country remaining in the EU now offers tax-free shopping, while we don’t. Effectively, we have suddenly started charging 20% more than other countries do for the same goods,” the letter states.
“The Treasury claims this move is saving the taxpayer £2billion a year, but this is flawed and misleading. The foreign visitors who have traditionally come from the US, Middle East, China and elsewhere to shop for the best of British inject large sums into the broader economy, on top of what they spend on retail purchases,” it continues.
Data from tax refund experts Global Blue says that consumer spending in Britain is still one third lower than in 2019 while spending in France is 8% higher.
Brian Duffy, CEO of Watches of Switzerland Group says: “The removal of tax-free shopping for international visitors has been felt by businesses across the UK, particularly in key tourist destinations such as London, Manchester and Edinburgh. Tourists are switching their travel plans to visit cities like Milan or Paris, and the result is a drop in footfall and sales for the UK’s hospitality and retail industries.”
Other signatories from the watch and jewellery industry include Charlie Pragnell, managing director of Pragnell; David Edwards, managing director of Seiko and Grand Seiko UK; Theo Fennell, founder, Theo Fennell; Antony Lindsay, CEO, Fabergé; Michael Wainwright, managing director, Boodles; Giles English, co-founder, Bremont Watch Company; Henry Deakin, managing director, Deakin and Francis; and Robert Ogden, executive director, Richard Ogden Ltd.
The letter in full
Dear Chancellor,
The pandemic placed most businesses under acute pressure, particularly those in the hospitality, retail, travel and tourism sectors which we represent. So, the Treasury’s decision in 2021 to end the longstanding scheme that allowed international tourists to shop tax-free was puzzling and ill-timed.
Liz Truss’s short lived government announced plans to reintroduce the VAT rebate to boost the high street, but this has now been reversed.
Every country remaining in the EU now offers tax-free shopping, while we don’t. Effectively, we have suddenly started charging 20 per cent more than other countries do for the same goods. The Treasury claims this move is saving the taxpayer £2billion a year, but this is flawed and misleading.
The foreign visitors who have traditionally come from the US, Middle East, China and elsewhere to shop for the best of British inject large sums into the broader economy, on top of what they spend on retail purchases.
Figures from Visit Britain show that shopping has traditionally been one of the most popular reasons cited for visiting the UK. Indeed, British business traditionally made £3.5billion in tax-free sales to tourists every year. The scheme benefited tourist hotspots like London, Manchester, and Edinburgh, as well as out of town shopping villages.
Visitors did not just spend in retail stores – their custom supported hotels, restaurants, and theatres. Oxford Economics has concluded that if all the economic impacts of a tax-free shopping scheme are taken into consideration, the UK would, in fact, benefit to the tune of hundreds of millions of pounds a year.
The impact of its removal is already being seen. It was depressing to witness a great British brand like Mulberry closing the doors of one of its flagship stores as a direct result of the loss of tax-free shopping, as it did earlier this year.
New research from tax-free shopping experts Global Blue shows the UK is losing out on the significant spending made by international travellers as global travel resumes. Paris, Madrid and Milan can’t believe their luck as the UK’s lack of tax-free shopping drives travellers to spend in Europe.
Data covering international visitors from the USA, Gulf Cooperation Council (GCC) and south-east Asia regions from a sample of 11 leading retailers shows that whilst the UK has recovered post-pandemic to 64 per cent of
2019 levels of consumer spending, Italy is at 79 per cent, Spain at 84 per cent and France, which is benefiting most from the UK Government’s decision to remove tax-free shopping, has recovered to 108 per cent.
Looking at individual nationalities, the differences become even more pronounced. For USA visitors, the UK is back to 101 per cent of 2019 spend. However, Italy is enjoying spending from US visitors at 190 per cent of 2019 levels. Spain is up to 201 per cent and France is at a staggering 226 per cent.
For GCC visitors, the UK is at only 65 per cent of 2019 levels whilst Spain is already at 158 per cent, Italy at 166 per cent, and France topping out at 198 per cent.
In addition, UK residents are starting to take advantage of tax-free shopping in Europe, with £450million disappearing from high streets.
It is clear that the removal of tax-free shopping is turning into an extraordinary own goal for the UK.
We understand that there are pressures on the public finances at the present time. But the evidence shows that reinstating tax-free shopping would be a win for both business and the taxpayer.
We call on you to think again.
Yours sincerely
Sir Rocco Forte, Chairman, Rocco Forte Hotels
Sean Doyle, CEO and Chairman, British Airways
Thierry Andretta, CEO, Mulberry
Neil Clifford, CEO, Kurt Geiger
Caroline Rush, CEO, British Fashion Council
Alex Beard, CEO, Royal Opera House
Anya Hindmarch, Founder & CEO, Anya Hindmarch
Fraser Brown, Retail Director, Heathrow Airport
Sir Paul Smith, Designer, Paul Smith
Tom Athron, CEO, Fortnum & Mason
Jonathan Akeroyd, CEO, Burberry
Helen Brocklebank, CEO, Walpole
Hannah Colman, CEO, Jimmy Choo
Christopher Cowdray, CEO, Dorchester Collection
Dee Corsi, CEO, New West End Company
Paul Barnes, CEO, Association of International Retail
Gianfilippo Testa, CEO, Alexander McQueen
Paul Jackson, General Manager, Claridge’s
Manju Malhotra, CEO, Harvey Nichols
John Durnin, Business Director, Bicester Village
Knut Wylde, General Manager, The Berkeley
Eric Heerema, Chairman and CEO, Nyetimber
Kiki McDonough, Founder and Creative Director, Kiki McDonough
Sandeep Bhalla, General Manager, The Connaught
Theo Fennell, Founder, Theo Fennell
Andrew Stembridge, Executive Director, Iconic Luxury Hotels
Franck X Arnold, Regional Vice President and Managing Director, The Savoy London
Christian Bachler, Executive Vice President, Wedgwood
Guillaume Marly, Managing Director, Hotel Café Royal
Andrew Henning, General Manager, Grosvenor House Suites
Antony Lindsay, CEO, Fabergé
Thomas Kochs, Managing Director, Corinthia London
Michael Wainwright, Managing Director, Boodles
Philipp and Mark Mosimann, Mosimann’s Private Dining Club
Michael Bonsor, Managing Director, Rosewood London
Claire German, CEO, Design Centre Chelsea Harbour
Julia Carrick, CEO, Julia Carrick Luxury
Hugh Seaborn, CVO and CEO, Cadogan
Joanne Rees, Managing Director, Elizabeth Gage
Trevor Pickett, CEO, Pickett
Brian Duffy, CEO, Watches of Switzerland Group
Pamela Harper, Chairman and CEO,
Halcyon Days and The Caverswall China Company
Giles English, Co-Founder, Bremont Watch Company
Chris Roberts, Managing Director, Como Holdings
Sophia Hirsh, Managing Director, Hirsh London
Nicholas Bond, Owner and Director, Franchetti Bond
George Somlo, Director, Somlo Antiques London
Adil Mehboob-Khan, CEO, Liberty London
Luca Donnini, CEO, Temperley London
Derrick Hardman, Managing Director, Global Blue (UK)
David Edwards, Managing Director, Seiko UK
Robert Ettinger, CEO, Ettinger London
Charlie Pragnell, Managing Director, Pragnell
Annoushka Ducas, Founder and Creative Director, Annoushka Jewellery
Erdem Moralioglu, Designer and Philippa Nixon, CEO, Erdem
Sean Gilbertson, CEO, Gemfields
Adrian Maronneau, Managing Director, Bucherer UK
Nicholas Brooke, CEO, Sunspel Limited
Simon Cundey, Managing Director, Henry Poole
Martin Mason, Managing Director, Tricker’s
Sacha Rose, CEO, Derek Rose Ltd
Charlie Holland, CEO, Gusbourne Fine English Wines
Julian Moore, Managing Director, DR Harris
Hilary Freeman, Managing Director, Edward Green
Jamie Gill, Executive Director, Roksanda
Chris Gaffney, CEO, Johnstons of Elgin
Steven Medway, Chief Executive, Knightsbridge Partnership and King’s Road Partnership
Baton Berisha, CEO, The Wolseley Hospitality Group
Jonathan Reekie, Director, Somerset House Trust
Chrissie Rucker, Founder, and Mary Homer, CEO, The White Company
Philip Mould, Founder, Philip Mould and Company
Prudence Gibson, Founder and Creative Director, E P O K
Ewan Venters, CEO, Hauser and Wirth
Jeremy Morris, CEO and Creative Director, David Morris Jewels
Emma Willis, Owner, Emma Willis
Joanne Taylor-Stagg, General Manager, The Athenaeum Hotel and Residences
Mark Evans, Managing Director, Bentley and Skinner
Ben Dalrymple, Managing Director, Lock and Co. Hatters
Emmy Scarterfield, Designer, and Dickie Higgins, Managing Director, Emmy London
Henry Deakin, Managing Director, Deakin and Francis
Dean Girling, Director, Gaziano and Girling
Sue Medway, Director, Chelsea Physic Garden
Archie Hewlett, Founder, Duke and Dexter
Fedro Gaudenzi, Founder and Director, Fedro Gaudenzi
Jonathan Church, Joint Managing Director, Cheaney Shoes Ltd
Irene Mateides, Founder and Publishing Director, FMS
Robert Ogden, Executive Director, Richard Ogden Ltd
Andrew Guest, Commercial Director, Thomas Goode and Co. Ltd
Emma Fox, Chief Executive, Berry Bros. and Rudd
Lalage Beaumont, Owner, Lalage Beaumont
Join the Conversation
2 Comments
We are losing millions of pounds with this
Scrap the tax o
Leave a comment
Leave a comment
Processing...
Thank you!Your subscription has been confirmed.You'll hear from us soon.
We are losing millions of pounds with this
Scrap the tax o