The tourist tax affects every high street in Britain… The case for scrapping it is overwhelming, writes ANDREW HINDS
- Shopping has long been one of the most popular reasons cited for visiting UK
Our business was established in 1856 and has been independently run and family owned ever since. We have 127 F. Hinds stores across England and Wales, which will be a familiar sight to many of you in your local high street.
In the past, we have always offered tax-free shopping and there is no doubt that it has traditionally been a significant draw for foreign tourists coming to the UK.
Indeed, figures from Visit Britain show that shopping has long been one of the most popular reasons cited for visiting the UK. British business made £3.5 billion in tax-free sales to tourists every year. The scheme was a boon to big tourist hotspots like London, Manchester and Edinburgh, out-of-town shopping villages which attract visitors seeking bargains, and also ordinary high streets.
This is not just a narrow issue affecting a few luxury stores in London’s West End, as ministers claim when challenged about their decision to scrap VAT rebates for tourists in 2021. In our experience, tourists travel all over the UK and spend across the economy. In places like Cambridge, tourists are the lifeblood of local businesses.
ANDREW HINDS: In the past, we have always offered tax-free shopping and there is no doubt that it has traditionally been a significant draw for foreign tourists coming to the UK
In other parts of the country, foreign visitors come to see friends and family – perhaps a child who is studying at a university in the UK – or to visit our famous tourist attractions. So, to a greater or a lesser extent, this issue is affecting every high street in the land. We have certainly noticed that tourist footfall has not returned to the degree we would have expected post-Covid, and official figures bear this out.
Of course, these tourists would not just spend in retail stores like ours. They contribute to the entire economy, frequenting restaurants, museums, galleries, theatres, hotels, public transport and so on.
At a time when we should be straining every sinew to boost economic growth, we have instead made ourselves the most expensive place to shop in Europe. Every single country in the EU still offers tax-free shopping, while we don’t. It is clear this puts our economy at a significant disadvantage. It doesn’t make any sense.
Ministers have asked for evidence of the harm being done. I am one of 350 business leaders who has signed an open letter to the Chancellor describing the tourist tax as a spectacular own goal. The fact that so many leading businesses have felt compelled to put their names to the campaign in this way is extremely telling.
ANDREW HINDS: Tourists contribute to the entire economy, frequenting restaurants, museums, galleries, theatres, hotels, public transport and so on
Businesses like mine don’t generally like to get involved in political issues. We have done so because there is a very clear impact on the jewellery trade. People in all sectors are seeing the effect on their business, feel very strongly that end of tax-free shopping is turning into a disaster for our economy and want the Treasury to think again.
Today’s economic analysis by the Centre for Economics and Business Research should give the Government pause for thought. The Government claims the scrapping of tax-free shopping saves the exchequer £2 billion a year. This is short-sighted, since the foreign visitors who come from the US, Middle East, China and elsewhere to shop in our famous shopping districts inject huge sums into the broader economy, on top of what they spend on retail purchases.
The new research concludes that when you take all that wider spending into account, reintroducing VAT rebates would boost the public finances by £2.3 billion a year. It would also support jobs and crucially, bring in an extra two million tourists a year to the UK.
As we struggle for economic growth, we can’t afford to turn away these high-spending visitors. The evidence is now overwhelming that scrapping the tourist tax would boost the entire economy and the public finances too. So, a U-turn is inevitable; it’s only a matter of timing. I would urge the Government to get on with it.
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