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Tax-free Shopping for International Visitors — [Dr Rupa Huq in the Chair]
07 September 2023
Lead MP
Geoffrey Clifton-Brown
North Cotswolds
Con
Responding Minister
Victoria Atkins
Tags
EconomyTaxation
Word Count: 10080
Other Contributors: 4
At a Glance
Geoffrey Clifton-Brown raised concerns about tax-free shopping for international visitors — [dr rupa huq in the chair] in Westminster Hall. A government minister responded.
Key Requests to Government:
The Treasury should commission an independent assessment through the Office for Budget Responsibility or a respected audit firm to consider the full economic effect of tax-free shopping, including its impact on VAT refunds and increased spending by tourists. If the assessment shows that the full tax impact is neutral or net positive, the Government must move quickly to restore tax-free shopping.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
The UK is missing out on economic growth due to the lack of tax-free shopping for international visitors. Since the end of tax-free shopping schemes in December 2020, visitor numbers have not recovered as well as other European countries, and high-spending tourists are choosing destinations where they can reclaim VAT. Data from businesses shows that many UK stores are closing or considering relocation to mainland Europe due to the impact on sales.
Nickie Aiken
Con
Cities of London and Westminster
International visitors pay VAT on various services such as hotels, restaurants, bars, and theatres. The independent review should consider the potential VAT revenue for the Treasury from more international visitors shopping in the UK. Nickie Aiken highlighted the importance of international visitors to her constituency's economy, noting that retail in Cities of London and Westminster accounts for over 4,000 businesses employing approximately 55,000 employees. She cited research showing that reintroducing tax-free shopping could attract more than 1.6 million extra visitors annually, stimulating an additional £2.8 billion in tourist spending across the UK. Asked if VAT RES would be reintroduced based on recommendations from a group working together to improve the tourist offer, questioned the current Mayor of London's role in ensuring a strong tourism offer for places like Oxford Street.
Richard Thomson
SNP
Dunfermline and West Fife
Mr. Thomson criticised the Treasury's assumptions behind removing tax-free shopping, arguing it has harmed UK tourist destinations like central London and Bicester Village. He cited data showing US tourists spending three times more in Spain, Italy, and France than before, suggesting the UK is missing out on 40 times the forecasted number of visitors due to the policy change.
Tan Dhesi
Lab
Slough
Congratulated the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) on securing the debate, expressed that Labour is committed to reviving high streets and creating jobs but believes tax-free shopping should not be a priority at this time.
Slough
I am concerned about the decline in tourist spending due to tax-free shopping issues and urge the government to address this by providing clearer guidance for retailers.
Government Response
Victoria Atkins
Government Response
Responded to the debate by clarifying terminology regarding VAT-free shopping, highlighted that the VAT retail export scheme is still available for non-UK visitors purchasing items in store or online. The minister noted the cost of reintroducing VAT RES could be around £2 billion annually and estimated an increase of 50,000 to 80,000 extra people coming to the UK if such a scheme were introduced, endorsed by the OBR. She also mentioned that the key motivators for tourists visiting the UK are history, heritage, vibrant towns, and cities rather than shopping.
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Assessment & feedback
Summary accuracy
About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.