Pressure on Government to reverse decision to ditch VAT-free shopping

Pressure grows on Government to reverse decision to ditch VAT-free shopping for tourists as retail consortium says it will ‘strengthen’ UK’s appeal to holidaymakers

• John Redwood urged the Government to U-turn, telling Hunt to ‘get on with it’ 
• Harrods and Selfridges bosses say it will put the UK at a serious disadvantage 
• VAT-free shopping allows tourists to claim back 20 per cent on their purchases

Ministers are facing growing calls from business leaders and MPs to ditch their so-called ‘tourist tax’.

The bosses of Harrods and Selfridges joined Tory backbenchers in warning that Chancellor Jeremy Hunt’s decision to scrap VAT-free shopping would put the UK at a serious disadvantage.

The British Retail Consortium said bringing back the tax break would ‘strengthen’ the UK’s appeal to international tourists.

Spokesman Tom Ironside said: ‘Offering tax-free shopping for tourists would help strengthen the UK’s position as a top destination for international shoppers.

‘As it stands, the UK is one of the only European countries not to provide a tax-free shopping scheme to encourage tourism.’

Michael Ward, who runs Britain’s biggest department store Harrods, warned that London was losing wealthy customers to Paris because of the ‘tourist tax’

The bosses of Harrods and Selfridges joined Tory backbenchers in warning that Chancellor Jeremy Hunt’s decision to scrap VAT-free shopping would put the UK at a serious disadvantage

VAT-free shopping allows tourists to claim back 20 per cent on their purchases. It was first axed by then-chancellor Rishi Sunak when the UK left the EU. Kwasi Kwarteng tried to reintroduce it in his ‘mini-Budget’, but Mr Hunt reversed the plan, claiming it would save the Treasury £2 billion a year.

Every country in Europe charges a minimum 15 per cent rate of VAT but offers a refund for overseas visitors taking purchases home.

Former Tory minister John Redwood became the latest backbencher to urge the Government to U-turn, telling Mr Hunt to ‘get on with it’.

Mr Redwood said: ‘We need a pro-enterprise Government that understands lower tax rates and some tax breaks can produce more overall tax revenue, because it produces more jobs, turnover and profit.

Former Tory minister John Redwood became the latest backbencher to urge the Government to U-turn, telling Mr Hunt to ‘get on with it’

‘We will never sort the balance of payments out if we do not encourage people to come in and to spend on things in Britain. Tourism is an important part of our export opportunities. Get on with it, let’s have some new business – people coming and spending.’

The calls followed a warning from Michael Ward, who runs Britain’s biggest department store Harrods, that London was losing wealthy customers to Paris because of the ‘tourist tax’.

Mr Ward said the wider implications of discouraging high-spending tourists from visiting and staying in London had not been grasped. ‘There is very clear, factual evidence to show Paris has done disproportionately well as a consequence of this,’ he told The Mail on Sunday.

Research by Oxford Economics found that Mr Hunt would raise an extra £350 million a year in tax revenues by reinstating the measure. It said 1.6 million more tourists would come to the UK to take advantage of VAT-free shopping, spending £4.1 billion in hotels, restaurants and other attractions.

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