Tourism bosses name on Reeves to carry again VAT-free purchasing

Tourism bosses have urged Rachel Reeves to bring back VAT-free shopping to boost the Treasury’s coffers.

In a letter to the Chancellor of the Exchequer seen by The Mail on Sunday, they have called for her to scrap what has been dubbed the ‘tourist tax’ to attract more overseas visitors to visit the United Kingdom.

The levy costs billions each year, say economists, as tourists on shopping trips spend on hotels, restaurants and theatre visits.

Industry chiefs called for the Chancellor (pictured) to scrap what has been dubbed the ‘tourist tax’ to attract more overseas visitors to visit the United Kingdom

The tourism chiefs claim axeing the tax could help Reeves fill an estimated £22 billion ‘black hole’ she claims to have found in the public finances. 

‘The international visitor economy is not only a fast-growth sector but also contains an untapped £4.5 billion annual tax bonus… which could form part of your response to this fiscal problem,’ the letter said.

‘This tax is not only damaging Britain’s position as a global destination but is also costing the economy around £11.5 billion in lost spending each year,’ added the letter, signed by the heads of UK Inbound Tourism, the Tourism Alliance and the Association of International Retail.

They represent hundreds of members, which include Airbnb, shopping centre Bicester Village and the Titanic Belfast.

It is the latest call to axe the tax and bolsters the views of hundreds of other businesses – including the likes of Victoria Beckham and Marks & Spencer.

Hotelier Sir Rocco Forte, who has spearheaded a drive to get the tax scrapped which was backed by more than 500 bosses, has said that keeping it would make ‘a complete mockery’ of Labour’s growth promises.

When he was Chancellor in 2021 former Prime Minister Rishi Sunak axed tax-free shopping for international visitors.

His Conservative government refused to reverse the policy when he became Prime Minister.

Previous Treasury forecasts used to justify the levy should be given fresh scrutiny, the letter argues, as they did not factor in that tourists from the EU could spend much more in the UK if the policy was scrapped.

Businesses want Labour – at a minimum – to launch a formal assessment of the levy.