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Retail bosses have reportedly warned the government that the decision not to restore tax-free shopping for international tourists will have a knock-on effect on other industries, according to The Times.
Janine Constantin-Russell, boss of the outlet shopping centre at the O2 Arena, has accused the government of not paying attention to the consequences scrapping VAT-free shopping has had on the hospitality industry in the UK.
Speaking to the outlet, she said: “The government isn’t listening at all. It’s looking at the outgoings instead of looking at how much a tourist would spend across the wider hospitality sector. Every destination and attraction is affected, not just the luxury brands.”
Harrods managing director Michael Ward also said he anticipates the scheme will not be reintroduced in the near future.
He said to The Times: “Is Sunak, ahead of a potential election, going to admit that he totally messed up the VAT system? I am not a politician, but I think the chances of that are relatively thin. Then you’ve got the other issue, which is, will the labour government do it? At the moment it’s not on their agenda.”
Ward suggested that the government should permit a third-party provider, such as Global Blue or Planet, to oversee a fresh tax refund scheme for tourists in the UK.
Before the Spring Budget was announced in March Chancellor Jeremy Hunt asked the Office for Budget Responsibility (OBR) to “examine the costs of benefits of the scheme”.
At that time, the Association of International Retail (AIR) and New West End Company had also submitted new evidence to Downing Street suggesting that the amount of lost VAT was going to be just one fifth of the Treasury’s projection because overseas shoppers spend less money on shopping than hotels and leisure.
Constantin-Russel said: “We were really excited that we might get listened to and then, overnight, were told it was too expensive to reinstate.
“We’re being asked to do business with one hand behind our backs. We’re having to fight even harder to ensure that tourists visit the UK as they know they can get discounts in other countries such as France and Italy.”
