London
UK falling behind EU rivals on tourist spending after duty changes
Business renews calls to encourage wealthy
international visitors back to Britain
Daniel
Thomas in London MARCH 7 2022
https://www.ft.com/content/446dfa43-a7f1-4885-91f4-49ffb21f34e5
Britain is
losing its position as the favoured destination for high spending international
tourists to the EU after the government abolished tax-free shopping at the
start of last year, according to a new study.
Its
findings reflect warnings from retailers and operators in the leisure and
hospitality industries across the UK that the move would make the country less
attractive to tourists.
When the UK
was still part of the EU, visitors from outside the bloc had been able to claim
a VAT refund on most shopping receipts but the rule was scrapped after Brexit.
Global
Blue, the tax-free shopping refund agency, compared the behaviour of Gulf state
tourists in the EU in 2019 with their shopping habits last year. It found that
about a fifth of those shopping in the bloc in 2021 had previously only shopped
in the UK two years earlier, where they spent an annual average of €24,000
each. Last year, their spending dropped to zero in the UK but reached €22,000
each in the EU.
Close to a
third of those shopping in the EU in 2021 had previously shopped in both
continental Europe and the UK in 2019, but increased their average annual
spending per person in the bloc by 40 per cent to €22,000 last year, the study
found.
Business
will this week renew calls on the government to do more to encourage high spending
international tourists back to British high streets and retail destinations to
help the sector bounce back from the impact of the coronavirus pandemic.
Paul
Barnes, chief executive of the Association of International Retail (AIR), will
use an appearance before MPs to reinforce the need to bring big spending
tourists back to the UK.
“While
domestic shoppers are returning strongly to the high street, we are seeing a
noticeable absence of high spending international visitors that goes beyond the
consequences of the pandemic,” he said ahead of the hearing by the House of
Commons Digital, Culture, Media and Sport committee into promoting Britain
abroad.
“The Treasury
must look again at its decision to abolish tax-free shopping,” he added.
He said the
UK was giving other countries, including France and Italy, a 20 per cent price
advantage over the UK, “pushing those that traditionally contribute around
£28.4bn a year to our economy towards continental Europe”.
Vaughan
Allen, chief executive of CityCo, which manages Manchester’s business
improvement district, said: “The visitor economy supports 100,000 jobs in
Manchester. Ending tax-free shopping is a major blow.”
Heathrow
airport’s retail and property director Fraser Brown said: “In this post-Covid
world, we are having to compete more fiercely than ever before with our
European neighbours who have gone in the opposite direction by making their
tax-free shopping schemes more generous to try and entice visitors away from
the UK.”
AIR said
that non-EU visitors spent £17.8bn in 2019, of which £3bn was on tax-free
shopping and the remaining £14.8bn on hotels, restaurants, travel, culture and
entertainment raising around £3bn in VAT. It calculated that a 15 per cent fall
in the non-retail part of this spending would more than wipe out the estimated
£400mn of VAT that the Treasury forecasts it would collect by ending duty free
shopping.
It
estimated 20,000 jobs would be lost nationwide as a direct result of ending tax-free
shopping on high streets and at airports.
London set to lose 60,000 jobs if tax-free shopping decision is upheld
Chancellor Rishi Sunak announced last month that
tourists would no longer get a VAT refund on goods bought in the UK
By Naomi
Ackerman@nomiackermanJim Armitage@ArmitageJim
12 October
2020
London is
set to lose 60,000 jobs in the retail, entertainment and hospitality industries
if the government does not reverse its decision to abolish tax-free shopping
for overseas visitors, research showed today.
Chancellor
Rishi Sunak announced last month that tourists would no longer get a VAT refund
on goods bought in the UK. He said it would save £521 million in lost taxes
last year.
However,
businesses in retail and tourism say far more will be lost to the economy as it
will put tourists off coming here. For many visitors, shopping is one of the
biggest reasons to come.
Last year,
overseas tourists spent £28 billion in the UK.
Analyst
Global Blue has calculated the VAT refund cut will end up costing the economy
£6 billion a year in lost tourist spending, reducing tax revenues by £3.4
billion.
London will
be hardest hit, with £3 billion lost from tourist spending, it calculated.
Selfridges
chief executive Anne Pitcher said: “Tourists will not be travelling again for
12-18 months, but when they do, we know they will be very selective about the
prices they pay and VAT reclaim is a big factor.
“The
Chinese will choose to shop elsewhere. Those from the Middle East will go
elsewhere.”
French
President Emanuel Macron vowed to lure wealthy tourists to Paris after Sunak’s
announcement, offering more generous tax-free shopping allowances.
“He is
rubbing his hands with glee,” Pitcher said.
“The
tourists are not going to come to London when they can go elsewhere in Europe
and shop tax free."
Jace
Tyrrell, chairman of the Association of International Retail, said: “This is an
own goal that will be more damaging to the UK visitor economy than the
coronavirus.”
"We
will be the only country in the developed world to abolish tax-free, and the
knock on is going to be the loss of nearly 140,000 jobs across the UK - and
this is not just luxury, it is the economy, manufacturing jobs and more."
Helen
Brocklebank, CEO of British luxury trade body, Walpole, which represents more
than 270 UK brands from Burberry to Jimmy Choo, said she is "hopeful"
the decision will be reversed, as Mr Sunak has so far "been an incredibly
pro-business Chancellor".
She said:
"What we really, desperately want is the conversation to be opened up
again, and the decision reviewed.
"The
impact not just on retailers but on the whole ecosystem is going to be really
devastating. The timing could not be worse."
She added:
"Mr Sunak has been an incredibly pro-business Chancellor, he's really
listened to the [sector] needs during the crisis, and we are very keen to part
of the recovery and pay that back - but we can't do it if decisions like this
put our business model at risk.
"Overseas
visitors were worth £4.5billion to Walpole members. Tax-free shopping is a very
small part of that, but it is a significant part of the lure for the UK... It
is an ecosystem, and I think that hasn't been taken into account."
She said
many British brands had become very fragile from the impact of coronavirus on
trade already: “Any kind of little shocks could tip some of those businesses
over the edge, and some really famous names could go.”
The
Treasury has said that visitors would be able to recoup the tax by sending
products home by post.
Case study
Kathryn
Sargent was the first and only woman to be made a Head Cutter on Savile Row, at
centuries-old tailor Gieves & Hawkes.
The
46-year-old has since become Britain's first female Master Tailor, running her
own eponymous business off the Row for the past eight years.
She argues
that overseas clients are in part drawn to buy handmade suits in London by the
fact that they can offset the cost of their flight against the tax refund
received at the airport.
"I
spoke to one client in Washington about it [the policy change] who said 'what?
That's crazy, it's just bad economics'," Ms Sargent said. "My clients
live all over the world, my business is two-thirds exports. Part of the
experience of having a bespoke suit made is coming to London and seeing their
tailor, and spending time in London. At the end of the process, when they come
to collect the suit, they psychologically justify the trip because they get the
VAT refund back. It helps that decision to be made.
"Tax-free
shopping does make a big difference on a £5,000 suit, which I'm making."
She added:
"We can't just rely on London being an amazing city, we have to be
competitive.
"I
want to see this decision reversed."
UK urged to bring back tax-free shopping
By EARLE
GALE in London | China Daily | Updated: 2022-03-08 09:35
http://global.chinadaily.com.cn/a/202203/08/WS6226b2d1a310cdd39bc8b1a1.html
A decision by the United Kingdom to scrap tax-free
shopping for tourists has led to a huge drop in the amount of money big
spenders are leaving in the nation, research reveals.
Global
Blue, the agency that issues tax refunds on holiday purchases made by visitors
to the European Union, said its study found that around a third of people who
shopped in the EU in 2019 bought items in both the European mainland and in the
UK. That demographic has since increased its average annual per-person spending
in the EU by 40 percent, to 22,000 euros ($23,900), and reduced its spending in
the UK by a similar amount.
Global Blue
said around one-fifth of overseas visitors shopping within the EU in 2021 had
exclusively shopped in the UK in 2019, when they spent an average of 24,000
euros per person in British stores-an amount that has now been lost to UK
retailers.
The agency
said the British government's post-Brexit decision to abolish tax-free shopping
in order to collect an anticipated 400 million pounds in additional taxes,
which took effect at the start of 2021, has been disastrous for retailers and
cost them far more than the government could ever hope to collect in tax.
Paul
Barnes, chief executive of the Association of International Retail, told the
Financial Times that as many as 20,000 jobs in the retail sector could be lost
because of the demise of tax-free shopping.
Barnes told
the newspaper he will use an appearance this week before lawmakers on the House
of Commons Digital, Culture, Media and Sport committee to call on the
government to do more to help an industry reeling from the coronavirus
pandemic. "While domestic shoppers are returning strongly to the high
street, we are seeing a noticeable absence of high-spending international
visitors," he said. "The Treasury must look again at its decision to
abolish tax-free shopping."
Barnes said
the decision effectively handed EU nations, including close rivals France and
Italy, a 20 percent price advantage.
He told the
Financial Times that the price advantage is "pushing those that
traditionally contribute around 28.4 billion pounds ($37.4 billion) a year to
our economy toward continental Europe".
The
Association of International Retail says non-EU visitors spent 3 billion pounds
in the UK in 2019 on tax-free shopping alone. That shopping splurge was
supported by purchases of hotel rooms, meals out, and visits to attractions, he
said, all of which have been affected by the end of tax-free shopping.
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