Calls for Chancellor to intervene as Britain struggles under the weight of tourist tax

Recent statistics have revealed that European countries are reaping the benefits of tax-free shopping schemes for tourists, highlighting the need for Chancellor Jeremy Hunt to take immediate action.

While London’s tourist tax has led to a decline in its prosperity, rival cities in France, Portugal, and Italy have experienced economic recoveries due to a surge in visitor spending on luxury goods.

Sales via refund schemes in Europe are steadily approaching pre-pandemic levels. In May, these sales increased by 10% compared to the previous month, according to data from retail tech firm Planet.

As a result, European tax-free sales are now only 14% below their May 2019 levels, marking the strongest month for retailers on the continent since the pandemic began.

Unfortunately, the UK is poised to lose out this summer as American and Chinese tourists return to the continent with ample spending power for luxury goods. In May, US tourists increased their spending with European retailers by 27% compared to April, signaling a thriving summer tourism season.

Sales to US customers are now 71% above pre-pandemic levels and 83% higher for the year to date. However, these tourists are choosing to shop in other countries and avoiding the UK entirely.

France has already surpassed pre-Covid levels of tax-free luxury product sales to international visitors, and Portugal is also experiencing a recovery to its 2019 sales figures.

‘While European retailers anticipate further summer growth as US and Chinese visitors continue to spend, UK retailers are disadvantaged by the lack of a Tax-Free shopping scheme, which puts them on an uneven playing field,’ said Luca Cassina, President of Retail at Planet.

This situation puts London’s status as a premier shopping destination for tourists at risk, which could have a broader impact on hotels, restaurants, and cultural attractions.

Over 300 business leaders have supported The Mail’s ‘Scrap The Tourist Tax’ campaign, echoing industry demands for the government to reconsider its stance.

Mulberry CEO Thierry Andretta has also criticized the tourist tax, stating that it has undoubtedly impacted UK sales while retailers in European capitals flourish. Mulberry recently announced the closure of its flagship store on Bond Street due to a significant drop in trade since the tax was implemented.

Critics argue that the Treasury’s claim that scrapping the tourist tax would result in a £2 billion annual loss is unfounded, and instead, estimate a net gain of approximately £350 million.

The Treasury has responded, stating, ‘We support high street retailers by reducing business rates by 75% and effectively cutting corporation tax by £27 billion through full-expensing.’