Chancellor Jeremy Hint has decided to maintain the controversial ‘tourist tax’ introduced in 2020 for visitors outside of the European Union, ignoring calls from UK tourism and hospitality businesses,
Intended to help fund local infrastructure and services that are strained by tourism, the Treasury previously warned that scrapping the levy would cost up to £2 billion in lost taxes per year.
Before the levy, tourists were able to claim back VAT on certain goods and services purchased in the UK, making them 20% cheaper.
Businesses argue that the levy detracts tourists from visiting the UK, thus impacting already strained revenues among tourist-dependent industries.
Responding to the Chancellor’s Spring Budget, Helen Dickinson, chief executive of the British Retail Consortium, said: “The UK remains the only European economy without a tax-free shopping scheme, meaning we are missing a golden opportunity to boost tourism and spending across the country.
“Independent research from CEBR shows that the UK economy is losing £11 billion a year because of the loss of tourism resulting from, what is effectively, a tourist tax.
“Tax-free shopping not only convinces tourists to buy more, but it also attracts shopping tourism, supporting businesses and jobs in the UK.”