Tory rebels urge Hunt to scrap tourist levy
JEREMY HUNT has been urged to ditch the tourist tax on retailers by a group of MPS led by Tory rebels.
The 64-strong cross-party group including 38 Tory MPS and peers have written to the Chancellor to introduce a “new internationally competitive taxfree shopping scheme” for international visitors to the UK.
They warn that the removal of taxfree shopping in 2021 has had “significant repercussions” for tourism, manufacturing, leisure, retail and hospitality businesses across the UK, and not just in London.
They include former Cabinet ministers Dame Priti Patel, Sir Liam Fox, Sir Iain Duncan Smith, Damian Green and David Jones as well as former ministers Kelly Tolhurst, Caroline Dinenage, Tracey Crouch and Paul Scully.
Campaigners believe the Treasury is considering scrapping the tourist tax amid growing evidence of the damage it is having on visitor spending compared with UK competitor countries.
Mr Hunt said in the Autumn Statement that he would “look again” at the pros and cons of the tax perk, after research showed a fall-off in spending and visitor numbers. In its letter the group said that ditching the tax could lead to a 90pc boost to spending for every pound in VAT rebated on visitor sales.
“Research by the Association for International Retail (AIR) shows that British shops are losing £1.5bn per year as non-eu international visitors choose instead to spend in France, Italy, and Spain where tax-free shopping schemes are in place,” it said. “Introducing a new, internationally competitive tax-free shopping scheme would help UK businesses rebuild the economy and for every £1 rebated in tax-free, the Treasury would gain £1.90 in return through the direct and indirect effects of increased visitor spending, according to the AIR.”
Critics warn the wider loss to the UK economy of closing the tax perk is £2.5bn more than any gain in VAT revenues making it a major “own goal” for a government trying to kick-start growth.
Visitors from outside Europe and the US were down by 19pc between July and September compared to the same period in 2019, said the Office for National Statistics.
Spending by visitors from China was down 41pc last summer compared with 2019. Visitor spend in France and Italy has risen significantly from key markets including the US.