by Dame Priti Patel has called on Jeremy Hunt to scrap the “tourism tax” in this week’s Budget.
The former home secretary said the Government should reintroduce VAT-free shopping for tourists to inject fresh momentum into the economy.
In an article for The Telegraph, she said such a move would “give businesses a real boost” and help them compete with European rivals.
A wide range of groups, including the British Chambers of Commerce, the Federation of Small Businesses and Heathrow Airport joined the campaign to remove the tourist tax.
Dame Priti said: “Our country now needs more pro-business measures to ensure future growth and with the Budget approaching, the Chancellor must consider scrapping the tourist tax and reintroducing VAT-free shopping for foreign visitors.
“This decision will give a big boost to businesses because the current tourism tax makes us less attractive to foreign visitors and tourists and is widely opposed by a broad coalition of businesses.
“From tourism boards and local councils, to high street favorites and our airports, there is growing demand to reintroduce tax free shopping.”
She cited data from Visit Britain which showed that spending by overseas visitors in the third quarter of 2023 was down 10 per cent in real terms compared to the same period four years earlier, just before the pandemic.
“Unless tax-free shopping is reintroduced, British businesses and brands will continue to lose out to their European competitors, where tax-free shopping continues,” she said.
“Our competitors in Europe have already benefited, with France set to hit record levels of tourism spending in 2022 and 2023 as they attract high-spending tourists.
“That’s why the Chancellor needs to get Britain back on a competitive footing because duty-free shopping will boost the economy again, support job creation and help our retail, hospitality and tourism sectors thrive .”
Cut the tourism tax to help our retail, hospitality and tourism sectors thrive
One of the great benefits of Brexit is that our country would have full control over our economic and tax policies, and the fiscal freedoms to encourage inward investment and support free enterprise to create jobs, wealth and prosperity, ie writes Priti Patel.
I have always believed that Britain should stand as a symbol of free trade and be open for business.
Our country now needs more pro-business measures to ensure future growth and with the Budget approaching the Chancellor must consider scrapping the tourist tax and reintroducing VAT free shopping for overseas visitors.
This decision will boost business as our current tourism tax is less attractive to foreign visitors and tourists and is widely opposed by a broad coalition of businesses.
From local tourism boards and councils, to those on the high street and our airports, there is growing demand to reintroduce duty free shopping. Leave and Remain supporters also rallied behind the efforts to achieve this tax reform.
In fact, over 350 businesses and organizations have supported this campaign. The British Chambers of Commerce, the Federation of Small Businesses and Heathrow Airport are among those campaigning.
Their increasingly vocal opposition to the tourism tax is evidence of its growing impact and pull on our economy.
Data from Visit Britain shows that spending by overseas visitors was down 10% in real terms in the third quarter of 2023 compared to levels four years earlier, just before the pandemic.
These reductions in tourist visits and spending mean that less money is coming into our economy to support jobs and businesses.
According to some studies, the impact on our GDP is between £4 billion and more than £10 billion. They also show that an additional 78,000 jobs could be supported and the Exchequer could receive hundreds of millions of extra pounds in tax revenue through new economic growth if they scrapped the tourist tax.
This is not just a theoretical loss as a result of lower investment, but real jobs are being put at risk and businesses are closing as tourists spend their money elsewhere. Unless tax free shopping is reintroduced, British businesses and brands will continue to lose out to their European competitors, where tax free shopping continues.
Our European competitors have already gained an advantage, with France set to hit record levels of tourism spending in 2022 and 2023 as they attract high-spending tourists.
High spenders and tourists from the US, Canada, the Middle East and China are now finding that Paris and other European cities are more attractive than London and the UK.
We need to stop these trends and show the world that Britain is open for business and a global tourism destination. As Conservatives, we know that lower tax rates and a reduced tax burden generate more tax revenue from growth and increased economic activity.
That’s why the Chancellor needs to get Britain back on a competitive footing because tax-free shopping will grow the economy again, support job creation and help our retail, hospitality and tourism sectors thrive.
Priti Patel is the MP for Witham in Essex and is a former home secretary.
