The UK’s reputation as one of the iconic destinations for retail has taken years to build up, but it is one that is firmly established. From home grown brands to up-and-coming streetwear, from Edinburgh to Oxford Street, Britain is the place for tourists to splash the cash and then return home with their newly acquired favourite items. This is both due to fantastic British businesses but also the popular tax-free shopping regime the British government had established, enabling tourists to save 20 per cent when shopping.
Now this hard-won reputation is falling away after the 2021 decision to scrap tax-free shopping despite strong signals of extending the scheme just months earlier. Almost overnight, tourists saw prices hiked by 20 per cent compared with this country’s closest European neighbours, delivering a blow to British businesses at a time when many were struggling to survive.
The reality is every sale diverted from British tills to the European continent puts at risk the wages and livelihoods of thousands reliant on retail and the domestic side of its supply chain. Hotels, restaurants and attractions right across the UK all benefit from getting tourists through the door.
More widely, Britain is bucking the trend seen in continental Europe and Asia where competitive, low tax regimes have ushered in economic prosperity. If the Government is serious about prioritising growth, why have they tied one hand behind our back?
It is not often that 400-plus businesses, more than 50 cross-party MPs and the regional mayors all agree — but on this occasion, everyone is aligned. The UK being the only country in Europe not to offer a proper tax-free shopping incentive to visitors makes the country an uncompetitive, unattractive place to spend and do business. That is the message of a new campaign we are launching today. Heathrow, the British Chambers of Commerce and the Federation of Small Businesses (FSB) are coming together to urgently call for a change.
At Heathrow alone, while passenger numbers have almost recovered, retail spend was down 37 per cent in real terms during the first nine months of 2023 compared with the same time period in 2019, due to the withdrawal of tax-free shopping. More generally, pressures including rising rents and employment costs are ramping up, with Federation of Small Businesses’ latest research showing hospitality and retail businesses have the lowest confidence levels, compared with the other major sectors.
Competitive tax policy on the continent means tourist spend is being offshored, with France and Italy winning big. Retail spend in France has reached record breaking heights. Both states have chosen to extend their tax-free offering, laughing all the way to the bank with money that used to be spent here. Without policy change, this spend will never return to our shores.
It is within the government’s gift at the spring budget to introduce a new, internationally competitive tax-free shopping incentive to win back shoppers, with it delivering a much-needed shot in the arm for every town and city across Britain.
Findings from Oxford Economics show the size of the prize — re-establishing a competitive retail tax policy would generate an expected increase in economic activity worth £4.1 billion and supporting 78,000 jobs, delivering a monumental boost to a sector that has struggled to recover from Covid. If this self-defeating tax was ended and we put the turbochargers back under our world-famous retail sector, the Treasury would benefit from a net gain of £350 million.
Our campaign today has one clear message, Britain’s reputation as one of the world’s premier shopping locations must be protected. Scrap the tourist tax.
From Thomas Woldbye, the chief executive of Heathrow airport, Shevaun Haviland, the director general of the British Chambers of Commerce, and Tina McKenzie, the advocacy chairwoman of the Federation of Small Businesses
Source from The Time
Original News HERE
