Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Scrapping VAT-free shopping for tourists costs UK £11bn

by January 31, 2024
January 31, 2024
Scrapping VAT-free shopping for tourists costs UK £11bn

The government’s decision to scrap VAT-free shopping for tourists is costing the economy £11.1 billion in lost GDP and deterring about two million foreign visitors each year, according to an analysis by the Centre for Economics and Business Research (CEBR).

The number of tourists coming to the UK still remains around one million visitors short of pre-pandemic levels and spending by tourists in real terms has also failed to recover fully.

Rishi Sunak’s decision in 2021 to charge VAT on shopping for tourists, reversing a tax rebate that had been in place for decades and still exists in every EU country, has been highlighted by the CEBR and business leaders as a reason for the slow recovery in UK tourism.

The think tank calculated that visitor numbers would have been 589,000 higher in the third quarter of last year if a rebate scheme had been in effect and expenditure would have been about £1.3 billion higher.

Across the year, visitor numbers could have been two million higher with a £4 billion increase in spending, leading to a GDP boost of £11.1 billion and a net fiscal gain of £2.5 billion.

The research comes as more than 420 business leaders, from the chief executive of British Airways, Sean Doyle, to Gianfilippo Testa, the leader of fashion house Alexander McQueen, have called on Sunak to reinstate VAT-free shopping for tourists.

In the letter, the signatories point to research by tax-free shopping experts Global Blue, based on a sample of 11 leading retailers, showing that the post-pandemic recovery in consumer spending in Italy, Spain and France have all considerably outstripped the UK’s own recovery.

During the autumn statement in November, Jeremy Hunt, the chancellor, pledged to “look again at the numbers”, regarding VAT-free shopping, saying that the policy was changed because “we did not think we could afford to continue it”, citing a Treasury analysis that estimated the cost of the policy at £2.5 billion.

In their letter, the business leaders questioned the Treasury’s figures, labelling them “flawed and misleading” because they did not account for the money tourists spend outside retail stores, such as hotels, museums or other attractions.

Since the autumn statement the chancellor’s fiscal headroom — the amount of money the government can spend without raising the debt burden — has increased considerably. Economists estimate that even after the £20 billion in tax cuts made in November, the chancellor has anywhere between £15 billion and £20 billion to spend in March.

Hunt has given strong hints that he plans to cut taxes in the spring, telling business leaders at the World Economic Forum in Davos that the “direction of travel” indicates that economies growing faster than the UK, in North America and Asia, tend to have lower taxes.

The Treasury said: “We keep all taxes under review and recognise the value that retailers bring to Britain. That is why we announced a £4.3 billion business rates package at the autumn statement to support businesses and the high street.”

Read more:
Scrapping VAT-free shopping for tourists costs UK £11bn

0
FacebookTwitterGoogle +Pinterest
previous post
I’m a middle-aged suburban dad – Can I become a TikTok star?
next post
Sotheby’s reports near-record $7.9bn in sales as covid sales boost continues

You may also like

UK retailers feel the pinch as Tourist Tax...

August 3, 2023

Waitrose admits blocking rival supermarkets from opening stores

September 6, 2022

Is Monetary Policy the Force Behind Shifting Exchange...

January 29, 2025

Pollution Reduction Strategies for Businesses: Victoria Gerrard La...

June 10, 2024

Hunt rules out tax cuts before next general...

September 11, 2023

Approvals for mortgages fall for fifth month in...

March 2, 2023

Embracing Sustainability Through Third Party Maintenance

April 18, 2024

5 Tips to Help You Pay Off your...

December 2, 2022

Lifelong Learning Culture at Work: The Role of...

June 11, 2024

South East leads in bank loans to small...

October 21, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • ‘Bold’ general who led US’ ‘Midnight Hammer’ strikes on Iran ends Middle East reign

      August 25, 2025
    • Democrats opposed John Bolton for years — until they sought him as an ally against Trump

      August 25, 2025
    • Top GOP senator defies Trump demand to bend Senate rules for his court picks

      August 25, 2025
    • Patients Using Popular Meds May Face a Tariff Hit: US–EU Trade Deal Targets Branded Drugs Like Ozempic and Wegovy

      August 25, 2025
    • What Automatic Planning and Scheduling Means for Your Projects

      August 25, 2025
    • Ultimate Traders Review: Easy and Effective Prop Trading

      August 25, 2025

    Categories

    • Business (8,876)
    • Investing (2,236)
    • Politics (16,481)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved