Britain’s business leaders blast Rishi Sunak for ‘spectacular own goal’ over the hated tourist tax
- Rishi Sunak was taken to task by business leaders over the hated tourist tax
- Mr Sunak left door open to U-turn on the tax, saying he is ready to look at data
- Read more: Time to scrap the ‘Tourist Tax’ and get Britain booming again!
Business leaders yesterday took Rishi Sunak to task over the hated tourist tax, accusing him of scoring a ‘spectacular own goal’ for introducing the levy.
Burberry chairman Gerry Murphy confronted the Prime Minister at a business summit and attacked the ‘perverse’ decision to remove VAT refunds on foreign visitors’ shopping.
Mr Sunak left the door open to a U-turn on the tax, saying he was ready to look at data showing ‘what’s happening on the ground’.
But Chancellor Jeremy Hunt, despite admitting UK business taxes were too high, claimed it would be too ‘expensive’ to change the policy now.
It came as a growing list of bosses piled pressure on the Government to act, adding to the coalition of business chiefs already backing the Mail’s Scrap The Tourist Tax campaign.
Former prime minister Liz Truss, London Mayor Sadiq Khan and Liberal Democrat leader Sir Ed Davey also added their voices to the clamour, although the Labour Party refused to do so.
Mr Sunak left the door open to a U-turn on the tax, saying he was ready to look at data showing ‘what’s happening on the ground’
Chancellor Jeremy Hunt, despite admitting UK business taxes were too high, claimed it would be too ‘expensive’ to change the policy now
London Mayor Sadiq Khan (left) and Liberal Democrat leader Sir Ed Davey (right) are among those supporting the scrapping of the tax
READ MORE: Jeremy Hunt signals new tax breaks for firms in bid to see off Tory rebellion
Sir Martin Sorrell, the advertising industry mogul behind marketing firm S4 Capital, said: ‘There should be a change.’
Industry leaders say the decision to scrap VAT-free shopping for foreign visitors in 2021 means that London is now losing out on the post-Covid recovery in high-end retail and tourism being enjoyed by rival cities Paris and Milan. They say reinstating it would be a win for both business and the taxpayer, with research suggesting it could bring a multi-billion-pound boost to the economy.
Mr Murphy took the PM to task during a question-and-answer session at a Business Connect event in London yesterday, where Mr Sunak met 200 business leaders in a bid to woo corporate Britain.
The Burberry boss said: ‘It is somewhat perverse that, on the day we left the single market a decision made by you as Chancellor made the UK the least attractive shopping destination in Europe.’
Mr Murphy added that ‘virtually every other shopping destination’ in Europe offered tax-free shopping. He said the UK had seen ‘by far the weakest recovery of all the major markets’ for Burberry, a £10 billion FTSE company which is Britain’s biggest luxury brand. ‘We are actively exporting business as a result of that policy to our continental competitors,’ Mr Murphy said. ‘So I would ask you in the spirit of making Britain a more competitive environment, in the spirit of fostering growth… to reconsider that position.’
The PM was taken to task during a question-and-answer session at a Business Connect event in London yesterday, where Mr Sunak met 200 business leaders in a bid to woo corporate Britain
Mr Sunak replied that he was ‘here to listen’ while insisting there were ‘good reasons’ for the policy
The Chancellor seemed to take a harder line, sticking to Treasury claims that scrapping the tax – which Ms Truss and Kwasi Kwarteng tried to do in their mini-Budget before the decision was reversed by Mr Hunt – would cost £2 billion a year
READ MORE: SIR ROCCO FORTE: The short sighted ‘Tourist Tax’ is driving away business from our shores. If the Chancellor wants to restore the country’s fortunes, he must act now
The Government is proving deaf to our pleas and blind to logic, writes Sir Rocco Forte (pictured)
He added: ‘We would urge you to look at this. This is a spectacular own goal and it can be a reversed by a decision from you and the Chancellor.’
Mr Sunak replied that he was ‘here to listen’ while insisting there were ‘good reasons’ for the policy. But he added: ‘We’re always happy looking at what’s happening on the ground and see if things are panning out as we expected them to.’
The Chancellor seemed to take a harder line, sticking to Treasury claims that scrapping the tax – which Ms Truss and Kwasi Kwarteng tried to do in their mini-Budget before the decision was reversed by Mr Hunt – would cost £2 billion a year.
That is despite research by Oxford Economics suggesting that the figure is an overestimate and outweighed by the tax windfall generated across the wider economy by attracting more tourists. The Chancellor said: ‘That saved us about £2 billion at the time of the Autumn Statement when I had to put up taxes by £25 billion and I would not have wanted to have put them up by £27 billion in order to have avoided that measure.
‘I will look at all independent evidence about the impact. Of course, all things being equal, I want to attract tourists to the UK and I want them to spend their money in the UK rather than the other places so I completely understand the competitive issues that are raised.’
Scores of retail, hospitality and tourism bosses have already written an open letter to the Chancellor calling on him to scrap the tourist tax.
Hotelier Sir Rocco Forte, British Airways and Fortnum & Mason are among those calling for a change.
Industry leaders say the decision to scrap VAT-free shopping for foreign visitors in 2021 means that London is now losing out on the post-Covid recovery in high-end retail and tourism being enjoyed by rival cities Paris and Milan
Another 20 business leaders added their names to the letter last night, taking the total to 90. New signatories include the chief executives of the White Company and the Dorchester Collection, and the bosses of art gallery Hauser & Wirth, where Princess Eugenie is a director.
Crossbench peer Baroness Wheatcroft, chairman of the Association of Leading Visitor Attractions, branded the decision to remove tax-free shopping for tourists ‘utterly crazy’. She said: ‘It was the only sensible thing in the Truss mini-Budget, and then Jeremy Hunt did away with it.’
A plea to the chancellor from 90 leading business chiefs
Dear Chancellor,
The pandemic placed most businesses under acute pressure, particularly those in the hospitality, retail, travel and tourism sectors which we represent. So, the Treasury’s decision in 2021 to end the longstanding scheme that allowed international tourists to shop tax-free was puzzling and ill-timed.
Liz Truss’s shortlived government announced plans to reintroduce the VAT rebate to boost the high street, but this has now been reversed.
Every country remaining in the EU now offers tax-free shopping, while we don’t. Effectively, we have suddenly started charging 20 per cent more than other countries do for the same goods. The Treasury claims this move is saving the taxpayer £2billion a year, but this is flawed and misleading. The foreign visitors who have traditionally come from the US, Middle East, China and elsewhere to shop for the best of British inject large sums into the broader economy, on top of what they spend on retail purchases.
Figures from Visit Britain show that shopping has traditionally been one of the most popular reasons cited for visiting the UK. Indeed, British business traditionally made £3.5billion in tax-free sales to tourists every year. The scheme benefited tourist hotspots like London, Manchester, and Edinburgh, as well as out of town shopping villages.
Visitors did not just spend in retail stores – their custom supported hotels, restaurants, and theatres. Oxford Economics has concluded that if all the economic impacts of a tax-free shopping scheme are taken into consideration, the UK would, in fact, benefit to the tune of hundreds of millions of pounds a year.
The impact of its removal is already being seen. It was depressing to witness a great British brand like Mulberry closing the doors of one of its flagship stores as a direct result of the loss of tax-free shopping, as it did earlier this year.
New research from tax-free shopping experts Global Blue shows the UK is losing out on the significant spending made by international travellers as global travel resumes. Paris, Madrid and Milan can’t believe their luck as the UK’s lack of tax-free shopping drives travellers to spend in Europe.
Data covering international visitors from the USA, Gulf Cooperation Council (GCC) and south-east Asia regions from a sample of 11 leading retailers shows that whilst the UK has recovered post-pandemic to 64 per cent of
2019 levels of consumer spending, Italy is at 79 per cent, Spain at 84 per cent and France, which is benefiting most from the UK Government’s decision to remove tax-free shopping, has recovered to 108 per cent.
Looking at individual nationalities, the differences become even more pronounced. For USA visitors, the UK is back to 101 per cent of 2019 spend. However, Italy is enjoying spending from US visitors at 190 per cent of 2019 levels. Spain is up to 201 per cent and France is at a staggering 226 per cent.
For GCC visitors, the UK is at only 65 per cent of 2019 levels whilst Spain is already at 158 per cent, Italy at 166 per cent, and France topping out at 198 per cent.
In addition, UK residents are starting to take advantage of tax-free shopping in Europe, with £450million disappearing from high streets.
It is clear that the removal of tax-free shopping is turning into an extraordinary own goal for the UK.
We understand that there are pressures on the public finances at the present time. But the evidence shows that reinstating tax-free shopping would be a win for both business and the taxpayer.
We call on you to think again.
Yours sincerely
- Sir Rocco Forte, Chairman, Rocco Forte Hotels
- Sean Doyle, CEO and Chairman, British Airways
- Thierry Andretta, CEO, Mulberry
- Neil Clifford, CEO, Kurt Geiger
- Caroline Rush, CEO, British Fashion Council
- Alex Beard, CEO, Royal Opera House
- Anya Hindmarch, Founder & CEO, Anya Hindmarch
- Fraser Brown, Retail Director, Heathrow Airport
- Sir Paul Smith, Designer, Paul Smith
- Tom Athron, CEO, Fortnum & Mason
- Jonathan Akeroyd, CEO, Burberry
- Helen Brocklebank, CEO, Walpole
- Hannah Colman, CEO, Jimmy Choo
- Christopher Cowdray, CEO, Dorchester Collection
- Dee Corsi, CEO, New West End Company
- Paul Barnes, CEO, Association of International Retail
- Gianfilippo Testa, CEO, Alexander McQueen
- Paul Jackson, General Manager, Claridge’s
- Manju Malhotra, CEO, Harvey Nichols
- John Durnin, Business Director, Bicester Village
- Knut Wylde, General Manager, The Berkeley
- Eric Heerema, Chairman and CEO, Nyetimber
- Kiki McDonough, Founder and Creative Director, Kiki McDonough
- Sandeep Bhalla, General Manager, The Connaught
- Theo Fennell, Founder, Theo Fennell
- Andrew Stembridge, Executive Director, Iconic Luxury Hotels
- Franck X Arnold, Regional Vice President and Managing Director, The Savoy London
- Christian Bachler, Executive Vice President, Wedgwood
- Guillaume Marly, Managing Director, Hotel Café Royal
- Andrew Henning, General Manager, Grosvenor House Suites
- Antony Lindsay, CEO, Fabergé
- Thomas Kochs, Managing Director, Corinthia London
- Michael Wainwright, Managing Director, Boodles
- Philipp and Mark Mosimann, Mosimann’s Private Dining Club
- Michael Bonsor, Managing Director, Rosewood London
- Claire German, CEO, Design Centre Chelsea Harbour
- Julia Carrick, CEO, Julia Carrick Luxury
- Hugh Seaborn, CVO and CEO, Cadogan
- Joanne Rees, Managing Director, Elizabeth Gage
- Trevor Pickett, CEO, Pickett
- Brian Duffy, CEO, Watches of Switzerland Group
- Pamela Harper, Chairman and CEO,
- Halcyon Days and The Caverswall China Company
- Giles English, Co-Founder, Bremont Watch Company
- Chris Roberts, Managing Director, Como Holdings
- Sophia Hirsh, Managing Director, Hirsh London
- Nicholas Bond, Owner and Director, Franchetti Bond
- George Somlo, Director, Somlo Antiques London
- Adil Mehboob-Khan, CEO, Liberty London
- Luca Donnini, CEO, Temperley London
- Derrick Hardman, Managing Director, Global Blue (UK)
- David Edwards, Managing Director, Seiko UK
- Robert Ettinger, CEO, Ettinger London
- Charlie Pragnell, Managing Director, Pragnell
- Annoushka Ducas, Founder and Creative Director, Annoushka Jewellery
- Erdem Moralioglu, Designer and Philippa Nixon, CEO, Erdem
- Sean Gilbertson, CEO, Gemfields
- Adrian Maronneau, Managing Director, Bucherer UK
- Nicholas Brooke, CEO, Sunspel Limited
- Simon Cundey, Managing Director, Henry Poole
- Martin Mason, Managing Director, Tricker’s
- Sacha Rose, CEO, Derek Rose Ltd
- Charlie Holland, CEO, Gusbourne Fine English Wines
- Julian Moore, Managing Director, DR Harris
- Hilary Freeman, Managing Director, Edward Green
- Jamie Gill, Executive Director, Roksanda
- Chris Gaffney, CEO, Johnstons of Elgin
- Steven Medway, Chief Executive, Knightsbridge Partnership and King’s Road Partnership
- Baton Berisha, CEO, The Wolseley Hospitality Group
- Jonathan Reekie, Director, Somerset House Trust
- Chrissie Rucker, Founder, and Mary Homer, CEO, The White Company
- Philip Mould, Founder, Philip Mould and Company
- Prudence Gibson, Founder and Creative Director, E P O K
- Ewan Venters, CEO, Hauser and Wirth
- Jeremy Morris, CEO and Creative Director, David Morris Jewels
- Emma Willis, Owner, Emma Willis
- Joanne Taylor-Stagg, General Manager, The Athenaeum Hotel and Residences
- Mark Evans, Managing Director, Bentley and Skinner
- Ben Dalrymple, Managing Director, Lock and Co. Hatters
- Emmy Scarterfield, Designer, and Dickie Higgins, Managing Director, Emmy London
- Henry Deakin, Managing Director, Deakin and Francis
- Dean Girling, Director, Gaziano and Girling
- Sue Medway, Director, Chelsea Physic Garden
- Archie Hewlett, Founder, Duke and Dexter
- Fedro Gaudenzi, Founder and Director, Fedro Gaudenzi
- Jonathan Church, Joint Managing Director, Cheaney Shoes Ltd
- Irene Mateides, Founder and Publishing Director, FMS
- Robert Ogden, Executive Director, Richard Ogden Ltd
- Andrew Guest, Commercial Director, Thomas Goode and Co. Ltd
- Emma Fox, Chief Executive, Berry Bros. and Rudd
- Lalage Beaumont, Owner, Lalage Beaumont
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