Business leaders are making a last-ditch bid to persuade Jeremy Hunt to scrap the tourist tax in his Budget this week.
As the Chancellor puts the finishing touches to tomorrow’s statement, the boss of Marks & Spencer joined a leading London jeweller and an executive at the O2 music arena to call for VAT-free shopping for foreign visitors to be restored.
And lobby group BusinessLDN warned that UK companies are operating at a ‘stark competitive disadvantage’ because tourists do not benefit from the same discount they get in France, Italy, Germany and Spain.
But it is feared their pleas will fall on deaf ears despite more than 500 companies backing this newspaper’s campaign to abolish the hated levy.
The Treasury believes scrapping the tourist tax – which was introduced by Prime Minister Rishi Sunak when he was Chancellor in 2021 – would cost £2billion a year in lost revenue.
The boss of Marks & Spencer has joined a leading London jeweller and an executive at the O2 music arena to call for VAT-free shopping for foreign visitors to be restored
But campaigners say this fails to take into account the huge amount tourists spend on hotels and restaurants, theatre trips and museums.
Economics consultancy the Centre for Economics and Business Research (CEBR) estimates the tax is costing the economy £11.1billion a year as tourists flock to rival shopping destinations such as Paris and Milan.
Warning that government policy means running a business in the UK ‘is like running up a downwards escalator with a rucksack on your back’, M&S chief executive Stuart Machin said the tourist tax ‘must be reversed’.
‘Be in no doubt that cities like Paris and Milan are taking full advantage,’ he said. ‘It’s keenly felt in our capital, London.
‘Everyone knows the sad plight of Oxford Street – once the UK’s premier shopping destination. We must do everything we can to restore the street to its former glory and get that lost footfall back.’
Janine Constantin-Russell, managing director of entertainment and retail at the O2 arena in London, said the UK’s standing as tourist destination for shoppers has ‘completely fallen off a cliff’ since the tax was introduced.
Although music lovers have flocked back to concerts since the pandemic, the O2’s 60 shops are missing out on extra cash from international visitors, she said.
Warning that consumers are ‘going somewhere else in Europe to get their big value items, spending that excess in another country’, she added: ‘At the heart of it, we are saying give us the opportunity to help our economy.’
Susannah Lovis, who has run a jeweller in her name in Burlington Arcade in Mayfair for 25 years, branded the levy ‘appalling’.
Lovis, whose jewellery has been worn by the Duchess of York, and TV presenters Christine Lampard and Holly Willoughby, said the tax is hurting business almost every day.
‘We have had so many tourists on the brink of purchasing high value items and then discovering that they were unable to reclaim the tax and taking the Eurostar to Paris to buy there instead,’ she said.
‘This happens to us on an almost daily basis. One memorable occasion was when we had a Saudi Arabian princess coming into the shop wanting to buy an expensive item of jewellery as well as presents for her family.
When she found out she could not reclaim the VAT, she left the shop.
‘It was an appalling decision by the Treasury to stop tourists reclaiming this tax and it has affected our business to a significant extent.’
Lovis added: ‘I shudder to think how many millions of pounds that other businesses have lost out on since it is so much less attractive for tourists to visit.
‘Looking around Mayfair, there simply aren’t as many shopping bags as in previous years.’
