Luxury stocks rise as tourist tax faces axe
As Kurt Geiger boss calls levy a ‘schoolboy error’...
Luxury stocks rose yesterday on hopes that the Government will scrap the hated tourist tax.
The Chancellor has ordered the Government’s economic watchdog to investigate whether the decision to axe tax-free shopping for overseas visitors is costing more than it raises.
That could pave the way for the decision to be reversed in the Budget next month in a major victory for the Mail, which last year launched the Scrap the Tourist tax campaign.
Shares in Burberry, Mulberry and Watches of Switzerland rallied amid signs Jeremy Hunt is finally listening to the industry’s pleas. Mulberry gained 10pc, Watches added 3pc and Burberry edged up 0.6pc.
A string of business leaders spoke out against the levy yesterday. Neil Clifford, the boss of Kurt Geiger, described it as a ‘schoolboy error’.
Fashion designer Sir Paul Smith said the campaign to scrap the tax was not about ‘ helping rich shoppers coming to buy cheap handbags’ but boosting the wider economy.
Hotelier Sir rocco Forte, who has organised an open letter to the Chancellor signed by more than 400 bosses, said: ‘ We have been arguing for over a year that the tourist tax is a spectacular own goal that is hitting the entire tourist economy – not just retailers, but hotels, restaurants, tourist attractions and transport.
‘Now we see the share prices of important retailers surging on the news that the Chancellor has finally ordered a review of the policy. This should demonstrate to the Treasury the real-world impact the tourist tax is having on UK plc.’
rishi Sunak abolished VAT-free shopping for overseas visitors in 2021 when he was chancellor, and the Treasury claims reinstating the perk would cost the Exchequer £2bn a year.
But a report by the Centre for Economics and Business research last week suggested the tax was costing the wider economy more than £11bn as wealthy tourists head to Paris and Milan rather than London.
And over the weekend it emerged that the Office for Budget responsibility (OBR) will investigate the ‘ costs and benefits’ of the decision ahead of the Budget on March 6.
Speaking to the Mail about the levy, Clifford said: ‘It was a bit of a schoolboy error making that decision, someone did the maths wrong. Those international visitors are just spending a lot more time in other cities. I was in Paris on Friday and most of the luxury goods stores there have queues of people – and we don’t.
‘Brexit was promised to be a global Britain and then we closed the doors to give people reasons to go elsewhere.’
He said businesses needed ‘immediate action’ next month and not a promise that will take years to implement. ‘We have had many years too long of an incorrect policy,’ he said.
Commenting on the tourist tax for the first time, Smith said: ‘It’s not always necessarily about rich shoppers coming to buy cheap handbags, it’s the fact that when they’re here, they do spend money in our great cities.’
Speaking to Sky News, he added: ‘There are a lot less people coming to the country, especially to shops, hotels, restaurants, museums.’
Marks & Spencer, Harrods and Primark are among more than 420 names that have backed the Mail’s campaign calling for the Government to scrap the levy.
Ministers have tried to dismiss the concerns of business leaders by arguing tax-free shopping benefits only luxury brands and the most affluent tourists hunting for a bargain.