Calls to ditch tourist tax intensify as 400 businesses sign letter

Calls to ditch the tourist tax intensify as 400 leading businesses sign letter calling for Jeremy Hunt to bring back VAT-free shopping for international visitors amid fears it is costing the economy £10billion a year

  • McDonald’s franchise and shoemaker Arthur Sleep are among latest signatories
  • Report found that VAT refunds would make British economy £10billion better off

A Royal-approved shoemaker and a fast-food giant have joined forces with more than 400 leading businesses demanding ministers scrap the tourist tax.

In a letter to the Chancellor, they said reinstating tax-free shopping for overseas visitors would give the economy a boost – in a win for both business and the taxpayer.

High street fashion brand Superdry, a franchise of 31 McDonald’s restaurants in London and the Prince of Wales’s shoemaker Arthur Sleep are among the latest signatories. Along with some of Britain’s biggest retailers, hotels and restaurants, they warned Jeremy Hunt that removing the VAT refund for visitors was an ‘extraordinary own goal’.

A report by the Centre for Economics and Business Research earlier this year found Britain’s economy would be £10billion a year better off as a result of reinstating VAT refunds, with government coffers boosted by £2billion.

The Mail’s Scrap The Tourist Tax campaign backs calls for the Government to think again. In a debate in Parliament on Thursday, cross-party MPs said the economy is ‘missing out’ as a result of the tax and called on the Treasury to commission an independent assessment of the figures.

A report earlier this year found that the British economy would be £10billion a year better off if VAT refunds were reintroduced

Among the latest signatories to the letter to Mr Hunt, organised by top hotelier Sir Rocco Forte, are luxury fashion house Giorgio Armani and footwear company The Dune Group.

Superdry last night described the current shopping rules as ‘absurd’. Co-founder and chief executive Julian Dunkerton said: ‘The Government urgently needs to look at the impact the absence of tax-free shopping is having. We are in the absurd situation where a UK citizen can go to France and shop tax free, yet a Chinese tourist can’t shop tax free in the UK.

‘The result is wealthy tourists are being forced to go to mainland Europe to shop instead of coming here, and that’s a disaster for our economy and London especially.’ Tracey Greaves, of the Goodwood Estate in West Sussex, home to the Festival of Speed, Goodwood Revival and Glorious Goodwood, has also signed the letter.

She said: ‘The removal of tax-free shopping should be reconsidered as a matter of urgency. This is not just an issue that affects luxury retailers in the West End of London. It negatively impacts any business operating within the luxury retail, tourist or hospitality industries across the whole country.

‘We know that the traditional VAT rebate was a major driver of visitor numbers and, as we strive to achieve meaningful economic growth, we need to do all we can to encourage tourism to the UK.’

And the Diamond Lab, which sells diamonds in department stores such as Selfridges, said the impact of the absence of VAT-free shopping had been ‘significant across the industry’.

Its managing director, Jamie Amelia Patel, said: ‘Regardless of whether a tourist is buying a £500 item or a £500,000 one, tax-free shopping has historically played a pivotal role in enticing clients.

High street fashion brand Superdry was among 400 businesses to sign a letter calling for the Chancellor to reinstate tax-free shopping for international visitors

‘The allure of tax-free shopping has always generated excitement among clients. This situation has not only affected retail businesses, but it has also had a ripple effect on restaurants, hotels, and local communities that relied on these tourists’ spending.’

A Treasury spokesman said: ‘VAT-free shopping does not directly benefit Britons – it lets foreign tourists who buy items in the UK claim back VAT as they return home. The scheme could cost British taxpayers around £2billion a year, which is money we would need to find elsewhere. Fewer than one in ten non-EU visitors used the previous scheme, showing it’s not a significant attraction for tourists.’

The Treasury scrapped tax-free shopping for overseas tourists in 2021, believing that it was a ‘costly relief which does not benefit the whole of Great Britain equally’.

However, it kept tax-free shopping for goods purchased in the UK and sent directly to an overseas address, including in the EU. Liz Truss and Kwasi Kwarteng announced plans to reintroduce the VAT rebate last autumn, but Jeremy Hunt reversed the move soon after entering No 11.

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