House of Commons · Westminster Hall
07 September 2023 · 4 other contributors · 10,080 words
Opened by Geoffrey Clifton-Brown Con North Cotswolds
Responding minister: Victoria Atkins
Summarised by AI from the official record, so it can contain mistakes.
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 points
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.
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
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.
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.
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.
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.
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 AtkinsResponded 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.