Scrapping the tourist tax would deliver a £7billion boost to Britain’s high streets, business groups have told the Prime Minister.
The bosses of trade organisations – including the Heart of London Business Alliance, the Association of Town and City Management, and the Association of International Retail – are the latest to say that more needs to be done to help the high street.
In the letter, the three groups told Keir Starmer that reinstating a VAT-free shopping scheme for foreign tourists would position Britain ‘as Europe’s premier shopping destination for international visitors, investors and brands in retail and hospitality.’
The letter also says that the business rates system is ‘fundamentally broken’ and a complete overhaul would help high streets to the tune of £2billion.
More than 500 UK business leaders have backed a Mail campaign to bring back the 20 per cent refund scheme to encourage tourism.
And now fresh analysis from the Association of International Retail, which represents destinations like Bicester Village and Heathrow Airport, claims that this would provide a £7billion annual boost and support an estimated 140,000 jobs.
They say the country would be able to recover an estimated £2billion that is currently diverted from UK high streets to EU destinations each year.
And it would also ‘unlock a new EU shopper market’ – which could generate £5billion if on par with the level of spending from Brits in shops, hotels, pubs, and restaurants throughout the EU last year.
Business leaders have told Sir Keir Starmer that scrapping the tourist tax would deliver a £7billion boost to British high streets
Among those pushing for tax-free shopping to be reinstated are Harrods, Primark and Marks & Spencer, and luxury brands Burberry and Mulberry.
Instead of spending money in Britain, tourists are flocking to Paris, Milan and Berlin, leaving these economies to reap the rewards at the UK’s expense.
But lifting the tourist tax would make the UK the one European destination to offer rebates to 450 million EU customers, as well as tourists from elsewhere.
Before the Conservatives axed tax-free shopping in 2021, tourists from outside the EU could receive a 20 per cent VAT refund on purchases in the UK. Now the UK has left the EU and its customs union, EU residents could shop tax-free alongside high-spenders from China and the US.
The letter also urges the Government to ‘commit to a full impact review of tax-free shopping’ in what would be a ‘a cost-free and credible demonstration of support for high streets which would be widely welcomed by businesses across the UK.’
Their plea comes as some of Britain’s best-known restaurateurs, hoteliers and chefs, have warned Labour its tax raid will run many more firms into the ground and leave town centres desolate.
Concerns about the high street are rife as familiar names, including River Island, Claire’s Accessories and Poundland, have shut shops and axe jobs in recent weeks.
Business rates have been in the spotlight after increases to the tax for hospitality and retail at last year’s Budget sparked a huge backlash.
Lifting the tourist tax would make the UK the one European destination to offer rebates to 450million EU customers. Business leaders say the existing system is ‘fundamentally broken and requires structural reform’
After more than 1,500 venues banned Labour MPs from their premises, the Chancellor slightly backtracked to offer respite to pub and music venues in the form of a 15 per cent discount off their bill.
But other parts of the hospitality sector – including restaurants, hotels and cafes – will miss out on the 15 per cent discount amid fears that many more will go to the wall and axe jobs in the coming months.
And industry figures say the whole system – which they feel penalises brick-and-mortar businesses over online giants – needs to be re-done.
In their letter to Starmer, the trio of groups said a current Government consultation into rates reform only ‘focuses on incremental adjustments’.
But ‘the system is fundamentally broken and requires structural reform,’ the letter argues.
The groups propose introducing a 2 per cent levy on all online sales, in order to reduce all business rate bills by 35 per cent – which they say would create ‘a fairer, level playing field between high street and digital trading.’
The letter follows businesses saying more needs to be done after Labour last week announced an extra £800million of neighbourhood funding to give people a say on how money is spent in their areas.
Helen Dickinson, chief executive at the British Retail Consortium, said: ‘We welcome the additional funding to support the rejuvenation of local neighbourhoods.
‘The high street remains the centre of our communities, and the Prime Minister has spelled out the challenge of boarded up shops and gap-toothed high streets.
‘This not only harms community pride but limits employment opportunities and economic growth made possible by a thriving high street.
‘And while the heart of communities is the high street, the heart of the problem remains business rates. This tax is the final nail for thousands of boarded up shops, and a key factor when deciding whether to open new stores or close existing ones.
‘If Government wants local neighbourhoods to thrive long into the future, it must make good on their promise for meaningful reform of the broken business rates system once and for all.’
