Retail leaders are calling on Chancellor Rachel Reeves to scrap the so-called “tourist tax,” warning that Britain is losing billions in economic growth as tourists opt to shop elsewhere in Europe
In a letter signed by more than 300 chief executives, including leaders from John Lewis, British Airways, Fortnum & Mason, and the Royal Opera House, Reeves is urged to reintroduce VAT-free shopping for overseas visitors in her upcoming Budget.
The signatories, which also include high-profile figures such as hotelier Sir Rocco Forte, fashion designers Sir Paul Smith and Anya Hindmarch, argue that the removal of tax-free shopping has left the UK at a “massive global disadvantage.”
The letter states: “What has become known as the ‘tourist tax’ has turned into a spectacular own goal for the UK. The UK is now the only country in Europe that does not offer tax-free shopping to tourists, leaving British businesses at a massive global disadvantage. This does not just affect a few luxury stores in London’s West End… The entire tourist economy is affected.”
Brexit and the tourist tax
The tourist tax refers to the end of VAT-free shopping for tourists, a policy scrapped by then-chancellor Rishi Sunak in the wake of Brexit. The Treasury has maintained that reinstating the scheme would cost up to £2 billion annually in lost tax revenue. However, retailers argue that this assessment is flawed and overlooks the broader economic benefits of encouraging tourism.
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