£11BILLION cost of Britain’s tax-free shopping fiasco
THE economy is losing out on an £11billion boost because of the ‘ tourist tax’, a report out today has found.
Bringing back tax-free shopping for visitors could tempt an extra two million tourists to visit the UK, it is revealed.
The figures will put further pressure on Chancellor Jeremy hunt to bring back the refund scheme, which was abandoned in a post-Brexit bonfire.
Marks & Spencer, harrods and heathrow are among more than 400 prominent businesses that have backed the Mail’s campaign calling for the Government to Scrap the Tourist Tax. And now the analysis from the Centre for economics and Business Research (CeBR) has shown the benefits that restoring the scheme could have on the economy.
Axing the tax would help boost ‘ spillover’ spending across restaurants, shops hotels and transport.
Last week, official data revealed that there were a million fewer tourists in the UK last summer than there were in the same quarter of 2019.
According to the CeBR report, this number would have been 589,000 higher under a tax-free scheme – meaning an extra £1.3billion in spending.
If the country had enjoyed a more lucrative summer, additional visitor spending would have delivered a £3.5billion extra boost to gross domestic product (GDP). The centre said this would represent an £11.1billion annual boost to the economy.
Although it would cost money to bring back the scheme, extra spending from tourists would boost public finances and fill the Treasury’s coffers by £ 2.5billion, the report said.
Sam Miley, the CeBR’s managing economist, said: ‘The boost to public finances that could result from the scheme should be of interest to policymakers, particularly as the Chancellor prepares for the upcoming Spring Budget.’
Rishi Sunak scrapped the shopping scheme in 2021 when he was Chancellor – but most other european nations continue to offer the incentive.
Ministers have attempted to dismiss the concerns of top business leaders by arguing tax- free shopping benefits only luxury brands and the most affluent tourists hunting for a bargain. But bosses and MPs said last night that tourist spending supports jobs across the country, including in manufacturing industries.
Businesses including airports, designer fashion labels and high- street chains have said this makes the UK a less attractive option for visitors compared to nations such as France and Italy.
Andrew hinds, of the highstreet jeweller F.hinds, said the range of businesses calling for change – from harvey Nichols to Primark – signified the levy’s widespread effects.
‘It’s not just about people walking up and down Bond Street,’ he said. ‘It affects the whole economy and country, it is affecting people in manufacturing [and] people working in shops.’ Supporters of the campaign have called on Mr hunt to act in the Spring Budget on March 6.
Nickie Aiken, Tory MP for the Cities of London and Westminster, said: ‘The data makes it is clear that the UK economy is hurting because of the Government’s previous decision.’
Conservative MP Sir Geoffrey Clifton-Brown urged the Chancellor ‘to look again at all this data and bring back tax- free shopping in the Spring Budget’.