Dame Priti Patel has demanded Jeremy Hunt remove the “tourism tax” in this week’s budget.
The former interior minister said the Government should reintroduce VAT-free shopping for tourists to give a new impetus to the economy.
In an article for The Telegraph he said such a move would “give businesses a real boost” and help them compete with European rivals.
Many groups, including the British Chambers of Commerce, the Federation of Small Businesses and Heathrow Airport, joined the campaign to abolish the tourist tax.
Dame Priti said: “Our country now needs more pro-business measures to secure future growth and, as the Budget approaches, the Chancellor should consider scrapping the tourist tax and reintroducing VAT-free shopping for foreign visitors.
“Making this decision will provide a real boost to businesses, as the current tourism tax makes us less attractive to overseas visitors and tourists, and a broad business coalition is widely opposed.
“From local tourism boards and councils to our favorite streets and airports, there are growing calls to reintroduce tax-free shopping.”
He pointed to data from Visit Britain showing spending by overseas visitors was down 10 per cent in real terms in the third quarter of 2023, compared to the same period four years earlier, just before the pandemic.
“Unless duty-free shopping is reintroduced, British businesses and brands will continue to lose out to their European rivals where duty-free shopping continues,” he said.
“Our rivals in Europe have already gained an advantage, with France, which attracts high-spending tourists, experiencing record levels of tourism spending in 2022 and 2023.
“That’s why the Chancellor needs to put Britain back on a competitive footing, because the reintroduction of tax-free shopping will stimulate the economy, support job creation and help our retail, hospitality and tourism sectors thrive.”
Remove tourism tax to help our retail, hospitality and tourism sectors thrive
One of the great advantages of Brexit is that our country should have full control over our economic and tax policies, with fiscal freedoms that will encourage inward investment and support free enterprise to create jobs, wealth and prosperity. Priti Patel writes.
I have always believed that Britain should be a beacon of free trade and be open to business.
Our country now needs more pro-business measures to secure future growth and the Chancellor should consider scrapping the tourist tax and reintroducing VAT-free shopping for foreign visitors as the Budget approaches.
Making this decision would provide a real boost to businesses, as the current tourist tax makes us less attractive to overseas visitors and tourists and it is widely opposed by a broad coalition of businesses.
From local tourism boards and councils to high street attractions and our airports, there are growing calls to reintroduce tax-free shopping. Leave and Remain supporters have also united behind efforts to secure this tax reform.
In fact, more than 350 businesses and organizations supported this campaign. Campaigners include the British Chambers of Commerce, the Federation of Small Businesses and Heathrow Airport.
Their increasingly vocal opposition to the tourism tax reflects evidence of the tax’s deepening impact and the distress it is causing on our economy.
Data from Visit Britain shows spending by overseas visitors fell by 10% in real terms in the third quarter of 2023 compared to levels four years ago, just before the pandemic.
This reduction in tourist visits and spending means less money is coming into our economy to support jobs and businesses.
Some studies put the impact on GDP at between £4bn and £10bn. They also show that an extra 78,000 jobs could be supported and that the Treasury could generate hundreds of millions of pounds more tax revenue through new economic growth if it scrapped the tourism tax.
This is not just a theoretical loss from reduced investment, but real jobs are also at risk as businesses close as tourists spend their money elsewhere. Unless tax-free shopping is reintroduced, British businesses and brands will continue to lose out to their European rivals where tax-free shopping continues.
Our competitors in Europe have already taken advantage, with France set to experience record levels of tourism spending in 2022 and 2023 as it attracts high-spending tourists.
High spenders and tourists from the US, Canada, the Middle East and China now see Paris and other European cities as a more attractive destination than London and the UK.
We must stop these trends and show the world that Britain is open for business and a world-leading destination for tourism. As conservatives, we know that lower tax rates and reduced tax burdens generate more tax revenue from increased economic growth and activity.
That’s why the Chancellor needs to put Britain back on a competitive footing, because reintroducing tax-free shopping will strengthen the economy, support job creation and help our retail, hospitality and tourism sectors thrive.
Priti Patel is the MP for Witham in Essex and a former home secretary.