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Small businesses have called on the Treasury to scrap the tourist tax as fears mount that British firms could miss out on a Christmas shopping rush.
The Federation of Small Businesses (FSB) has told the Government to reinstate tax-free shopping for international visitors as it lays out its so-called ‘tinsel list’ of demands in the run up to the festive season.
With 119 days still to Christmas, the UK’s largest business group – which represents 150,000 traders – have said the move would provide a much-needed boost for businesses hoping to cash in on tourists visiting Britain’s yuletide markets and shopping hot spots this winter.
The Mail is leading a campaign to reintroduce VAT-free shopping for tourists, which was scrapped in 2021 when the UK left the EU.
More than 350 businesses – including Marks & Spencer and Burberry – have signed an open letter calling on the Chancellor to ditch the hated measure.
Smaller firms such as leather goods companies Ettinger, Pickett London and The Cambridge Satchel Co have also backed the calls, as well as Savile Row tailors Norton & Sons and Gieves & Hawkes.
Tax-free shopping would add billions more to the economy and support 78,000 jobs, according to research by Oxford Economics.
Tina McKenzie, policy chair at the FSB, told the Mail: ‘In a sluggish economy, small businesses are looking for growth.’
‘Tax-free shopping would attract high-spending international visitors back to our high-quality retail sector, with secondary spend in restaurants, bars and tourism – all sectors still struggling to recover their pre-Covid levels of trade.’
Many businesses are fearful of the continued negative impact of the tourist tax, which is prompting overseas visitors to go to Paris for shopping rather than London.
The perk allowed tourists to get a 20 per cent refund on their purchases – encouraging them to visit and spend in the UK. The discount remains in the rest of Europe.
Recent figures from Planet, which processes tax-free refunds, found that shoppers from the United Arab Emirates (UAE) and Saudi Arabia spent 34 per cent and 94 per cent more, respectively, across Europe in July versus June.
This has raised alarm bells for businesses for this winter who fear they are missing out on big spending tourists.
A study from the Centre for Economics and Business Research has found that the economy would be better off by more than £10billion a year by reinstating VAT refunds.
The research flies in the face of Treasury claims that the scheme would cost the British taxpayer £2billion.
As part of the ‘tinsel list’, FSB has also asked for the government to do more to support with energy costs and better transport for shoppers hoping to visit Britain’s high streets, which it says will further bolster UK tourism, hospitality and retail.
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