Is the so-called UK tourist tax approaching its end? Strong and persistent pressure from the UK retail industry to reverse the government's stubborn support for “taxes” may well be bearing fruit.
Chancellor Jeremy Hunt is believed to have asked the Office for Budget Responsibility (OBR) to look at whether VAT-free shopping for tourists should be reinstated.
If successful, it would be a huge boost for UK retail, especially in the luxury end of the market, as well as a much-needed boost for the hospitality industry.
But we shouldn't assume too much at this stage. There has been a false dawn before when Liz Truss's short-lived government said the decision to scrap duty-free shopping for tourists that coincided with Brexit would be reversed. However, that decision was reversed when the current Prime Minister and Minister of Finance took office.
The OBR has been asked to “examine the costs and benefits” associated with Rishi Sunak's decision to end duty-free shopping schemes for tourists in 2020. As chancellor to then-Prime Minister Boris Johnson, Sunak had announced that Foreign visitors would no longer be able to recover VAT on commercial purchases.
Richard Hughes, chairman of the OBR, said the government spending watchdog would publish its findings alongside the budget next month.
The review comes “in light of subsequent evidence on the number of international visitors and their consumption patterns and analysis by various external bodies,” Hughes said in a letter.
There have been a number of reports citing the benefits of VAT-free shopping refunds and last week the Center for Economic and Business Research (CEBR) said the tourist tax is “deterring two million foreign visitors from coming to the United Kingdom and costing the economy”. “£11.1 billion in lost GDP.”
The British government claims that the “tax”, which basically consists of eliminating VAT-free shopping for international visitors to Britain after Brexit, is the right measure for the country to keep money in its economy and avoid benefiting only the visitors from abroad.
Almost everyone (except the government, so far) seems to think that taking back the profit is a good idea. On Monday, Jacqui Baker, partner and head of retail at RSM UK, audit, tax and consultancy adviser, said: “The impact of removing tax-free shopping cannot be ignored. We know that international visitors are flocking to the UK because the luxury hotel market is experiencing strong demand, but they are postponing purchases until the next leg of their European tour, so countries like France and Italy benefit instead. ”.
He added: “It will be interesting to see the results of the OBR review to confirm what retailers are seeing – a direct correlation between the change in tax and consumer behaviour.”
And New West End Company boss Dee Corsi added: “The news [of] A review is a milestone in our three-year campaign to return the policy. The evidence, and the calls from business, are clear: duty-free shopping would have a net positive effect on tax revenue and make British businesses competitive again.
“It is difficult to overstate the opportunity before us. Reinstating duty-free shopping would allow the UK to recoup tourist spending that has trickled across the English Channel, while making us the largest and closest duty-free shopping destination for 450 million residents. of the EU.
“We already have the infrastructure and reputation to support the influx of spending and affluence that duty-free shopping would bring, and the benefits would be felt across the country, from regional airports and luxury manufacturing hubs to the West End.
“The reintroduction of tax-free shopping presents the Government with a golden opportunity: to inject growth back into the national economy, with a proven scheme that will be implemented by businesses and has cross-party support. “We urge the Government to grab it with both hands.”
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