Retail leaders are calling for the abolition of the UK ‘tourist tax’, citing major economic disadvantages.
- A collective of over 300 business executives, including top-tier brands, has urged the UK government to reimplement VAT-free shopping.
- The policy, initially removed post-Brexit, is claimed to deter approximately 2 million tourists annually, impacting the UK’s GDP significantly.
- Research indicates a potential loss of £11.1 billion in GDP due to the lack of a VAT rebate program for tourists.
- There is ongoing pressure on the UK government, with retailers pushing for an economic review and action to boost tourism.
In an influential appeal to Rachel Reeves, over 300 CEOs from major companies such as John Lewis, British Airways, and the Royal Opera House are advocating for the return of VAT-free shopping for international visitors. They argue the removal of this policy has positioned the UK at a significant global disadvantage, impacting the entire tourist economy.
The ‘tourist tax’, a policy resulting from the discontinuation of VAT-free shopping after Brexit, has been a contentious issue. The Treasury posits that its removal avoids an annual £2 billion tax revenue loss. However, industry leaders counter this by highlighting the broader economic benefits, including a potential GDP increase by £11.1 billion, as found by the Centre for Economics and Business Research.
Retail bosses emphasize that this policy decision inhibits the UK’s appeal as a shopping destination, with tourists preferring European cities like Paris and Berlin where VAT rebates are available. Brian Duffy, CEO of the Watches of Switzerland Group, insists that reintroducing VAT-free shopping aligns with the UK’s economic growth priorities.
Despite a review by the Office for Budget Responsibility affirming the minimal economic impact of the tourist tax, retail sectors are advocating for a reconsideration. They request a ‘fresh, objective review’ to address alleged financial impacts caused by the policy.
The broader retail and hospitality sectors, not just high-end brands, report adverse effects from the policy. They urge the reestablishment of VAT-free shopping to level the competitive playing field with European counterparts and to stimulate economic growth in a post-Brexit UK.
The ongoing debate on the tourist tax highlights the need for assessment and potential policy adjustment to strengthen the UK’s economic position post-Brexit.
