Scrapping ‘tourist tax’ could unlock a £3.7billion Brexit boost, ministers told

Scrapping the ‘tourist tax’ could unlock a £3.7billion Brexit boost, ministers have been told.

More than 400 business leaders have backed a Mail campaign to bring back the VAT refund scheme for foreign visitors, arguing it would encourage tourists to visit the UK.

In a fresh plea, the Association of International Retail (AIR) has told the Government that scrapping the levy would make the UK ‘the best place in the world for shopping’ and support at least 73,000 new jobs in a Brexit victory.

Bosses of firms including Boodles and F. Hinds called on Labour to urgently take a second look at the policy.

Instead of spending money in Britain, tourists are flocking to Paris, Milan and Berlin, leaving these economies to reap the rewards at the UK’s expense.

But reinstating the exemption would mean the UK becomes the only European destination to offer rebates to 450 million EU customers, as well as tourists from elsewhere. 

Before the initiative was axed in 2021, tourists from outside the EU could receive a 20 per cent refund on purchases in the UK.

Now the UK has left the EU and its customs union, EU residents would be able to shop tax-free alongside high-spenders from China and the US if the VAT exemption was restored. 

Chancellor Rachel Reeves has been urged to prioritise boosting economic growth at this autumn’s Budget amid fears last year’s tax raid is stifling jobs and investment

File image: More than 400 business leaders have backed a Mail campaign to bring back the VAT refund scheme for foreign visitors, arguing it would encourage tourists to visit the UK

This would deliver an additional spend of at least £3.7billion, if VAT-free shopping by EU visitors was at the same level as Britons’ spending in the EU last year.

Chancellor Rachel Reeves has been urged to prioritise boosting economic growth at this autumn’s Budget amid fears last year’s tax raid is stifling jobs and investment.

Derrick Hardman, chair of AIR, which represents firms including Bicester Village and Heathrow Airport, said: ‘With Britain no longer in the EU, we have the opportunity to become the best place in the world for shopping.’ 

Michael Wainwright, chairman of luxury jeweller Boodles, said: ‘We would encourage the Government to look at this urgently, as all the independent analysis… shows a new tax-free shopping scheme would more than pay for itself thanks to the extra spending that would be stimulated.’

Campaign supporters include luxury brands Burberry, Mulberry and Harrods, as well as Primark and Marks & Spencer.

• Angela Rayner has clashed with Rachel Reeves over her calls for councils to able to charge tourists for hotel stays, it was claimed last night. The Deputy Prime Minister has argued in Cabinet for town halls to be given powers to raise the levies. But Treasury officials are opposed to the tax amid fears it would be a fresh blow to hospitality businesses already hit by Labour’s tax raids in last year’s Budget, the Daily Telegraph reported.