host of London retailers, from fashion brands to Savile Row suit makers and jewellery firms, have sounded the alarm over concerns the tourist tax could hurt their all-important Christmas trading.
They warn that the crucial festive season could be “negatively impacted” due to the loss of VAT-free shopping for foreign visitors.
It comes a week after an analysis from the Centre for Economics and Business Research concluded the tourist tax is costing the UK £10.7 billion in lost GDP and two million extra foreign visitors a year spending across the economy.
The perk that allowed foreign visitors to claim a 20% refund on much of their shopping in the UK came to an end in 2021 after Rishi Sunak said it could no longer be justified.
Retailers and tourism bosses say the impact has been huge and have pleaded with the Government to reinstate it.
On the potential damage in the run up to Christmas, Helen Brocklebank, CEO of luxury goods association Walpole said: “This period is a significant and highly important one on most retail calendars. With so much pressure on the economy, why are we waiting for the impact of the tourist tax on our great British retailers to be irrevocable?”
Asked whether his stores’ Christmas trading season in the UK could be hurt due to the loss of VAT-free shopping, luxury goods firm Pickett’s founder Trevor Pickett said: “Definitely. The soft start of the holiday season, with visitors coming for Thanksgiving, was always an important week for us when we would see international sales ramping up. That did not happen last year.”
Sean Dixon, co-founder of Savile Row tailor Richard James, said: “London is in direct competition with other major European cities, Paris, Rome, Milan. It makes more sense for luxury shoppers to spend their euros abroad.”
Suit maker Richard James is among brands exposed to the impact of VAT-free shopping being axed
/ Richard JamesEyewear designer Tom Davies said international footfall has declined at his stores and “will remain suppressed until the policy changes”.
Other responses to questions from the Evening Standard included worries international footfall could fall at London stores over the next 12 months.
Other respondents included bag company Aspinal of London, maternity brand Seraphine, tailor Dege & Skinner, footwear firm Tracey Neuls, and jewellery retailers Austen & Blake and Elizabeth Gage among others.
Leaders in the cultural sector are also alarmed about the impact.
The Times reported that Neil Constable, chief executive of Shakespeare’s Globe, said: ”We have seen a direct impact on our income stream.”
He said the pandemic had created a tough environment for cultural venues and the Government should aim to make the UK the natural choice for those wishing “to spend cash at our incredible cultural offerings not just in London but UK-wide”.
An HM Treasury spokesman said: “VAT-free shopping does not directly benefit Brits.”
He added the scheme could cost British taxpayers around £2 billion a year “at a time when we’ve already had to take difficult decisions to get debt falling and fewer than one in ten non-EU visitors used the previous scheme, showing it’s not a significant attraction for tourists”.