London mayor Sadiq Khan has written to chancellor of the exchequer Jeremy Hunt calling for the return of tax-free shopping for international visitors.
The letter, which was backed by executives from big businesses such as Selfridges, Burberry and Heathrow Airport, argued abolishing VAT for tourists would enable UK firms to thrive in a highly competitive international market.
Khan wrote: “Our rich ecosystem of shops, hospitality venues, and cultural attractions, is heavily dependent on both domestic and international tourists. That is why together, London’s business groups and I have repeatedly called on the government to support the return of international tourists back to London, in what is a highly competitive international market, by reinstating tax-free shopping for overseas visitors and also extending this to EU visitors.
“The return of VAT-free shopping would provide a much-needed boost to London’s retail and hospitality sectors at a time they need it most. The prime minister has stated that his ambition is to grow the economy this year, and the government should be looking for ways to secure the capital’s status and reputation as a global city that is open to visitors and investment – not providing reasons for tourists and businesses to look elsewhere.”
Khan’s letter was also backed by business groups. Kay Buxton, chief executive of Marble Arch London BID, said: “We support the mayor of London’s call for the return of tax-free shopping for international visitors. We felt the chancellor missed a trick at the last budget by not reintroducing tax-free shopping for international visitors as this is one area which would have made a huge difference for not only the retail industry, but for leisure and hospitality businesses as well.
“It followed research from the Association of International Retail which found that reintroducing tax-free shopping would have brought in an additional 1.6m visitors in its first full year. It also estimated that these new visitors would have spent an extra £2.1bn on shopping, along with an additional £1bn on other goods and services such as hotels, restaurants and other leisure activities which would have been a vital boost for these businesses.
“We hope the mayor’s letter will convince the chancellor to rethink his position on tax-free shopping as a reversal on this policy would greatly benefit our hospitality businesses who offer excellent, world-class service and choice across Marble Arch.”
Steve Medway, CEO of the Knightsbridge and King’s Road Partnerships, which represents more than 500 businesses in the Kensington and Chelsea area, added: “The mayor’s letter hits the nail on the head; the withdrawal of tax-free shopping puts London as an international tourist destination at a disadvantage.
“London has everything to offer, and much to gain, if the chancellor sees reason and reintroduces a benefit that visitors from newly reopened China can get if they choose Paris or Milan instead of London.”
