London Evening Standard reignites ‘Scrap the tourist tax’ campaign

UK. The influential London newspaper Evening Standard this week reignited its campaign to reinstate tax-free shopping for overseas visitors, with a front page headline: ‘Scrap the tourist tax that’s harming London’.

The tax-free scheme, which entitles foreign visitors to a VAT refund for goods purchased from the high street and airports or other departure points in the UK, was discontinued by the UK government in 2021 under post-Brexit rules. This affected the sales of goods across various categories including fragrances, cosmetics, fashion, luxury and consumer technology.

This week’s powerful headline in London’s Evening Standard brings new impetus to the campaign to reinstate tax-free shopping 

A coalition of aviation, tourism and travel retail industry players has been lobbying for the return of tax-free sales for tourists after the UK government’s latest budget in March excluded a provision to reinstate this scheme.

As reported, many leading business chiefs in London’s tourism and retail sectors, including the bosses of British Airways, Mulberry, the Royal Opera House and Fortnum & Mason last month wrote an open letter to Chancellor Jeremy Hunt describing the policy as “a spectacular own goal”.

The coalition’s campaign peaked after a persuasive article written by Heathrow Retail Director Fraser Brown, which clearly set out the reasons the tax-free shopping policy is harming the UK, appeared in major UK newspaper Daily Mail on 26 April.

The Evening Standard has again taken up the baton, following its original article in December 2020, when it led the campaign of opposition to the axing of VAT-free shopping by UK Prime Minister Rishi Sunak when he was UK Chancellor.

This week its article, which featured the strong views of other retail stakeholders in the UK, stated: “London businesses fear billions of pounds of spending is being lost because tourists from Asia, America and the Middle East in particular are opting to do their shopping in other European cities that still have the perk.

“Shoppers from EU countries would also have been entitled to the VAT deduction here after Brexit — making London a very attractive cheap shopping destination for them.”

The newspaper notes that so far the Treasury and Office of the Prime Minister have refused to accept the case for a U-turn, arguing that it would cost £2 billion in lost tax revenue, although studies have shown that this would be more than outweighed by a £4.1 billion boost to GDP through extra tourist shopping.

Luxury sales at UK airports such as Heathrow are being heavily hit by the absence of tax-free shopping

Stakeholders demanding a reversal of tax-free shopping policy in the latest Evening Standard article include Watches of Switzerland CEO Brian Duffy; City of London Corporation Policy Chairman Chris Hayward; London Chamber of Commerce and Industry CEO Richard Burge; Westminster City Council Leader Adam Hug; and Dee Corsi, Chief Executive of business group New West End Company, which represents traders in Oxford Street, Bond Street and Regent Street.

Corsi said: “We have campaigned tirelessly for a reversal of the decision to end tax-free shopping, so we welcome the Treasury’s request for data that we know will prove this is an economic own goal.

“According to the Oxford Economics forecast, the last six months will have cost the UK £1.5 billion in missed international sales. International visitors are now realising that the UK is 20 per cent more expensive than other European cities, and West End businesses are suffering the consequences.

“Shopping is a key driver in deciding which city break to go on. Ever since tax-free shopping was abolished, international visitors have been returning home from our shores less likely to come back, and more likely to head to France or Spain next time.

“The latest data shows a genuine behaviour change, spend is being diverted to other European cities and the situation is worsening. Our message to the Prime Minister is clear — we need to restore tax-free shopping as quickly as possible. And he should start by commissioning an independent report into the direct impact this decision has had on the entire tourism ecosystem.” ✈


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