Senior politicians are backing calls to reinstate VAT rebates for visitors shopping in the UK from outside the European Union.
Former home secretary Priti Patel, is quoted in the Daily Telegraph saying: “Britain should be open for business and bringing back tax-free shopping will attract tourists to spend money here. The Chancellor must look at this policy as it would make our country more competitive, boost our economy with billions of pounds more being spent in Britain and tens of thousands of jobs would be created.”
Analysis by the Centre for Economics and Business Research estimates that the UK will have one million fewer tourists than would have been the case if the rebates were still available.
That will cost the economy £3bn in lost sales.
France and other tourist hot spots on the continent are the big beneficiaries with spending by overseas visitors from the United States and Arab states soaring.
The Telegraph reports that in 2022, spending in the UK by visitors from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE was still 35% below its pre-Covid level when the rebate was still available, but had doubled in France and was up 66% in Italy.
The Daily Mail launched a campaign this week to kill off the ‘tourist tax’.
However, the government on Tuesday said it is not looking to make any changes, reiterating its assumption that bringing back rebates would cost British taxpayers around £1.4bn a year.
Business leaders and analysts challenge this assumption, pointing out that the Treasury raises taxes from across the economy when high-spending tourists are here and that the rebate more than pays for itself.
I have no axe to grind either way as retailer or retail customer but clearly your article is polarised towards retailers, and I understand that. However, you can’t expect the Government to subsidise a luxury goods market – which is doing very nicely thank you – to the tune of a £1.4Bn detriment to UK tax payers.
Sometimes, we in the industry lose sight of real life.