Retailers urge Chancellor to scrap plans to tax tourists

Tax chancellor rishi sunak tourism covid-19
The fall in tourist numbers could result in up to 138,000 manufacturing, retail and tourism jobs being scrapped
// Up to £6 billion will be lost to UK businesses as tourist numbers and spending drops in key regions
// Retailers are urging the Chancellor to rethink his plans to tax tourists

The UK economy could lose up to £6 billion as retailers urge the Chancellor to rethink his plans to tax tourists.

The Centre for Economic and Business Research (CEBR) published a report into the cost of the Chancellor Rishi Sunak’s decision to end tax-free shopping from January 1, 2021, which has forecast a net loss for the Exchequer.

Up to £6 billion will be lost to UK businesses thanks to a drop in tourist numbers and spending in key regions such as London, Oxford, Edinburgh, Birmingham, Manchester and Liverpool.


READ MORE: 70,000 jobs at risk if Treasury scraps tax-free shopping


The fall in tourist numbers could result in up to 138,000 manufacturing, retail and tourism jobs being scrapped.

The report also highlighted new polling of 4800 overseas travellers which reveals that six in ten would now be less likely to visit the UK as a direct result of the removal of tax refunds for overseas visitors from outside the EU, with 93 per cent unlikely now to buy goods here.

“This decision makes no sense when both retail and tourism are under the cosh. It will cost the Treasury money – a minimum of £1/4 billion and probably a whole lot more,” CEBR said.

“It will reduce tourism. And it will reduce retail activity draining jobs from suppliers all around the country.

“Instead it would be better to extend the scheme to EU tourists, bringing in nearly a million additional visitors to the UK and boosting tax revenues from the additional income tax, national insurance, corporation tax and VAT on other items of tourism and spending.”

Mulberry chief executive Thierry Andretta said: “This latest unexpected and short-sighted manoeuvre of the government will destroy the UK’s ability to remain competitive with Continental Europe and comes at a time when our sector is already reeling from the effects of the Coronavirus pandemic and Brexit uncertainty.

“We believe that the government needs to be doing all it can to highlight the strengths of the UK and encourage visitors back to our shores, rather than actively discouraging them with rulings like this and encouraging foreign visitors to choose Paris and Milan.”

Before the Covid-19 pandemic, international visitors spent around £28.4 billion in the UK, £2.5 billion of this on tax-free shopping.

Visitors pay VAT on the other £26 billion, raising £5.2 billion for the Treasury.

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