Heathrow blames tourist tax as it struggles with empty shops
BRITAIN’S tourist tax has left Heathrow with empty shops that it is struggling to fill, the airport has claimed, as pressure mounts on Rishi Sunak to reverse his raid on travellers.
The UK’S largest airport said 18 stores, including those run by British luxury designer Mulberry, jewellery company APM Monaco, watchmaker Rolex and currency exchange business Travelex, had been shut “as a direct response” to the tax.
Seven stores that were left empty have yet to be filled by new businesses and the airport said the tourist tax was “continually brought up as a blocker for investment and entering Heathrow”. It came as City grandee Archie Norman attacked the Government’s decision to scrap tax-free shopping for tourists. He said the decision showed there was a “lack of a clear sense of where the UK should compete”.
Mr Norman, chairman of Marks & Spencer and a former Tory MP, said: “Most people would say that the UK should aim to be a centre for fashion, luxury goods, arts [and] heritage products, as this is an area where the UK has natural competitive advantage.
“Against that context it makes no sense to gift the trade elsewhere.”
Rishi Sunak scrapped Vat-free shopping for overseas visitors in 2021 while chancellor, arguing that the change would save the Treasury £2bn a year and have limited impact on spending. However, retailers say the policy has driven rich tourists elsewhere.
The chief executives of Burberry, Harrods and Selfridges have all said in recent weeks that shoppers are being tempted to other cities in Europe such as Paris and Madrid where VAT relief is still in place.
Figures show spending by US tourists in France and Spain has more than tripled so far this year compared with the same period in 2019. Spending in Britain has risen by just 1pc over the same period, according to data company Global Blue. Heathrow said the tourist tax has resulted in a “multimillion-pound drop in sales” at the airport.
Ninety nine per cent of shops and restaurant spaces in the airport were in use prior to the pandemic but the level stands at just 95pc today, with Heathrow blaming the tourist tax for its struggle to bounce back. The airport warned that Britain was now seen as a less attractive proposition for retail businesses seeking to invest.
Tom Athron, the chief executive of Fortnum & Mason, which has a store at Heathrow Terminal 5, said the impact was only expected to worsen next year with the Paris Olympics.
He said: “If you roll forward 12 months, I think we will see the result of [the tourist tax]. If we don’t do something we will find that Britain and London have become less competitive relative to other places across Europe.”
Mr Norman said:“it is not just Harrods and Fortnum that is affected, the impact on M&S at Marble Arch and High Street Kensington is noticeable and I am sure there are smaller specialist traders and fashion boutiques all over the country that are being impacted.”
Last month, the bosses of 20 airports, including Gatwick, Edinburgh, Belfast and Exeter, joined calls for Britain to bring back Vat-free shopping.
A government spokesman said: “Tax-free shopping is already available for all non-uk visitors who purchase items in store and have them sent directly to their overseas address.
“Extending the scheme to EU nationals could cost British taxpayers around £1.4bn a year, meaning taxes would need to go up to pay for it at a time when we’ve already taken difficult decisions to get debt falling.”