Don’t be shy, just scrap the hated tourist tax, ex-minister urges Rishi
A FORMER culture minister today adds pressure on Rishi Sunak to scrap the hated tourist tax, urging him not be ‘shy’ to use the benefits of Brexit.
Writing in this newspaper, Conservative Dame Caroline Dinenage backs the Mail’s campaign to bring back tax-free shopping for overseas tourists.
Dame Caroline, the chairman of the Commons culture, media and sport committee, said the absence of a competitive tax policy for tourists means British retailers are losing out – and urged the Prime Minister to review it at the next Budget.
She asked: ‘What happened to the much-vaunted post-Brexit freedoms that we were told would make our tourism industry one of the most competitive in the world?’ Calling for the Government ‘ not to be shy’ in exploiting such freedoms, she also pointed to figures which suggest the UK is lagging behind France, Spain and Italy in attracting spending from American tourists.
her intervention comes as campaigners for the end of the tax, which stops tourists claiming back VAT on their purchases, were given fresh hope after a major change in the way tax policies are modelled by the watchdog the Office for Budget Responsibility (OBR).
It has now begun to ‘score’ the economic benefits of policies to get people back into work – thus reducing their cost.
This has already been used over expansion of free childcare and the 2p cut to national insurance. now a Government source says this could be used for other tax policies in the future. Research commissioned in part by the Mail last year found scrapping the tourist tax could make the UK £10billion a year better off – and support 200,000 jobs.
The Centre for Economics and Business Research (CEBR) said bringing back tax-free shopping for overseas visitors would create new job opportunities and sustain existing ones. It forecast a boost to employment in transport, logistics, manufacturing and hospitality – as well as the retail sector.
According to the CEBR, the ‘spillover effects’ of additional tourist spending would have supported 172,000 jobs in 2022 – increasing to a projected 201,000 last year.
Business chiefs last night issued a fresh plea for the Treasury to consider the impact of scrapping the tax. hotelier Sir Rocco Forte said ‘any sensible analysis’ would show reinstating tax-free shopping would boost growth.
he added: ‘For decades the Treasury has been trapped in a narrow, orthodox way of thinking where it considers only the cost of tax cuts and not the dynamic positive economic effects that they have on jobs, spending and the public finances.
‘no consideration has been taken of the huge amounts tourists spend in the wider economy, for example in hotels like mine, restaurants, cafes, tourist attractions and transport.’
The Treasury scrapped tax-free shopping for overseas tourists in 2021. Chancellor Jeremy hunt has said he will review the most recent data to see whether it is affordable to reinstate it.