MPs demand a review of the tourist tax as Treasury urged to reassess

MPs demand a review of the tourist tax as Tory grandee urges the Treasury to reassess the impact of losing VAT-free shopping for international visitors – days after some of Britain’s biggest firms called for it to be reintroduced

• Cross-party politicians said the economy was ‘missing out’ due to ‘tourist tax’ 

The treasury must urgently reassess the potential economic benefits of bringing back tax-free shopping for overseas tourists, MPs demanded yesterday.

In a debate in Parliament, cross-party politicians said the UK’s economy is ‘missing out’ as a result of the so-called ‘tourist tax’ and called for an independent assessment of the figures.

Tory grandee Sir Geoffrey Clifton-Brown urged the Government to commission the fiscal watchdog, the Office for Budget Responsibility (OBR), or an audit firm to look at the tax impact of bringing back tax-free shopping for overseas tourists.

He said: ‘We urgently need an independent assessment on the full impact of tax-free shopping on the UK economy and its tax revenues.

‘If an independent assessment shows that the full tax impact is either neutral or net positive, then the Government must move quickly to restore tax-free shopping before more damage is done to the UK economy.’

The Treasury must urgently reassess the economic benefits of bringing back tax-free shopping for overseas tourists, MPs demanded yesterday (File image)

Sir Geoffrey, who secured the debate, said the Government’s current figures are ‘based upon the wrong methodology that do not consider in full the major upsides for the country’ – such as increased tax revenue from spending across the economy.

A report by the Centre for Economics and Business Research (Cebr), published in the Mail in July, found that bringing back tax-free shopping for overseas tourists would have a net positive effect on tax revenues.

Britain’s economy would be more than £10 billion a year better off as a result of reinstating VAT refunds – and government coffers would benefit to the tune of £2 billion a year, it said.

READ MORE: Warnings over Britain’s tourist tax as 90% of West End businesses say the end of VAT-free shopping for international visitors has damaged their trade as foreign travellers spend less

The Mail’s campaign to Scrap the Tourist Tax has won the backing of many of Britain’s biggest businesses, who have signed a letter to the Chancellor demanding a rethink.

Conservative Party deputy chairman Nickie Aiken told MPs during the debate yesterday afternoon that the Government’s refusal to reinstate tax-free shopping is ‘damaging’ London’s reputation as a global city.

And she said she believed France ‘improved their tax-free shopping offer for international visitors once we got rid of ours’.

Mrs Aiken, the MP for Cities of London and Westminster, said tax-free shopping had become the ‘missing piece’ in a jigsaw of cafes, bars, restaurants, hotels, shops and theatres.

‘If it is returned, it will not just benefit my constituency and the retailers, but thousands upon thousands of businesses across this country,’ she told Westminster Hall.

The SNP also backed the calls. The party’s international trade spokesman Richard Thomson said the policy was to the ‘detriment’ of regional airports and businesses.

Labour shadow treasury minister Tanmanjeet Singh Dhesi agreed with calls for an independent assessment of VAT-free shopping, but said his party would not make it a priority.

Treasury minister Victoria Atkins told the debate that the Government ‘still estimates that the measure would cost in the region of £2billion each year’.

In a debate in Parliament, cross-party politicians said the UK’s economy is ‘missing out’ as a result of the so-called ‘tourist tax’ and called for an independent assessment of the figures (File image) 

However, she would ‘reflect carefully’ on the calls for Government-commissioned independent analysis.

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 GB equally’.

However, it kept tax-free shopping for goods purchased in the UK and sent directly to an overseas address, including 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 No11.

Campaigners believe that the removal of the scheme is driving tourists away from London and Edinburgh to cities like Paris, Madrid and Milan.

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