William Skinner, Tailor Dege & Skinners believes that the tourist tax deters foreign visitors. Photo: REUTERS/Dylan Martinez
By Friday, William Skinner and his exhausted team will have sewn about a thousand crown-embossed buttons onto the coronation uniforms.< /p>
Dege & Skinner, one of Savile Row's oldest firms, is also working around the clock to replace the 160 gold E's (for Elizabeth) with C's on ceremonial tunics.
Their efforts will provide 80 members of the Yeomanry Committee with the Guards, the Royal Company of Archers and mermen dressed appropriately for the ceremony.
«It's a labor of love,» says Skinner, «but it's a hell of a lot of time.»
How and other businesses in Savile Row, he hopes the buzz around Saturday's performance will spark renewed interest in the craftsmanship for which London's Tailoring Golden Mile is famous.
Sir Winston Churchill, a parade of Hollywood stars and generations of royals were dressed as tailors in the street, with Princes William and Harry among Dege & Skinner has many clients.
However, today Skinner wants to discuss an issue that is hurting trade and will persist long after the holidays this week: the «tourist tax.»
Until 2021 visitors to the UK from outside the European Union could claim a refund of value added tax (VAT) charged on their purchases, effectively giving them a 20 percent discount.
Rishi Sunak opted out of this arrangement as chancellor to save the treasury £2 billion a year. He stated that there was little evidence that this would affect tourism, although exemptions remain in place across the EU.
Companies like Skinner complain that these changes have actually been disastrous for trading. Instead of making tourists from the US, the Gulf states and China pay more for their bags, watches and tailored suits, Skinner and his colleagues believe that the tax has backfired and is now deterring shoppers from shopping in the first place.
The impact is particularly acute in Savile Row, where a tailored suit typically costs up to £6,000. With the VAT exemption, a foreign buyer can claim £1,200 back.
“A lot of overseas visitors came specifically for this,” says Skinner. «And now we don't see the old volume coming into the store.
«Yes, we're still getting some of our regulars, but it's new clients and new people we haven't met before, that's where it hurts.
«Even a few of our regulars said, 'Look , you know, this VAT scheme, it's delaying my coming to London because I don't take my suit with me.»
Tourism is lagging behind
Tourism has long been the lifeblood of the tailoring street: according to the Association of Individual Savile Row orders, some stores previously relied on Americans for 70 percent of their sales.
Richard Anderson, managing director of Richard Anderson Ltd. , says his clients often plan their entire London vacation around the fitting.
For example, they might stay for a week to make their first appointment on Monday and finish by Friday.
During that time Anderson claims they will also spend the money on hotels, restaurants and concerts in the West End.
The downside, however, is that they are also financially literate and will not hesitate to look for better deals in European cities where they can still qualify for VAT exemption.
After three years , marked by the pandemic, skyrocketing due to electricity bills and train strikes, Anderson fears that the London luxury goods business remains in an increasingly precarious position.
“There were all sorts of obstacles in our path, so the government should help encourage customers,” adds Anderson. “But it creates a barrier because people can just go elsewhere and get the same goods at a much lower price.”
There is striking evidence that London is losing out. While US visitors' tax-free spending in the UK rose to 104% pre-pandemic levels in the first three months of this year, the equivalent figures for France and Italy were 313% and 243%, respectively, according to data from Global Blue. /p>
High-profile visitors from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE also flocked from other places. Spending by these tourists in the UK was only 65% of 2019 levels, compared to 198% in France and 166% in Italy.
And now that Chinese tourists are finally heading overseas again as their country is reopening, many retailers are waiting. nervous about their reaction to the VAT change.
A report released last year by Walpole, the UK's £48bn-a-year luxury goods sector, does not bode well. The VAT exemption was found to be a «particularly important bait» for the wealthiest visitors from China, the US and the Middle East, who tend to be price sensitive and highly mobile.
Tourism in London has not recovered,
as a result, Walpole warned that many buyers are now flocking to Paris, Milan and Madrid rather than London.
Helen Brocklebank, executive director of the lobbying group, says the abolition of duty-free shopping has left British businesses «trying to compete with Europe with their hands tied behind their backs.»
«Our members really see how this is hurting their brands,» she says.
The damage to the luxury goods industry has indirect consequences for the hospitality industry and British suppliers, says Walpole.
< p>Importantly, it also claims that the Treasury Department's analysis, which found that the initial VAT relief was costing the Treasury £2bn a year, was flawed.
In their own report, economists at Oxford Economics instead This was stated that the direct cost to the state budget was in fact £590 million and that the broader tourism stimulus through the restoration of duty-free trade offset this with additional taxes of £1.1 billion.
“This is not about bringing high-class people to London, but about creating jobs for a large number of UK residents,” says Michael Ward, managing director of Harrods, in the Walpole report.
Luxury goods makers Burberry and Mulberry are actively seeking to restore the VAT exemption. Skinner and his Savile Row colleagues are among those backing the campaign.
However, there is growing concern among retailers that they are not being heard by ministers.
Su Thomas of the Savile Row Custom Order Association says she and other industry insiders have lobbied the government on the issue «for a long time without success.»
Savile Row Tailor Richard Anderson says luxury taxes are having a domino effect on London's economy as a whole. Author: Jeff Gilbert
Anger erupted last month at a meeting with business leaders where the Burberry chairman accused Prime Minister Rishi Sunak and Chancellor Jeremy Hunt of making the UK the «least attractive» shopping destination in Europe.
G — In response, Sunak said there were «good reasons» the VAT exemption was removed, and Mr. Hunt pointed out that the extra income helped him balance the books after Liz Truss' disastrous «mini-budget».
However, this is exactly the kind of thinking that retailers think is wrong.
“This is a short term financial decision for the government with long term implications for our high quality British products and skilled workforce. ,» says Thomas.
Skinner agrees, arguing that the additional tax on foreign tourists has a «ripple effect» on the economy as a whole.
If tourists are kept from buying goods and businesses at all lose sales, the government loses not only £1,000 VAT but also potential corporate tax, corporate rates and employee income tax, and economic benefits from supply chains.
“There are many invisible taxes that have already been paid for this suit to return to the customer,” Skinner adds. «I think it needs to be emphasized — it's not just a top-line figure.»
Without a change of direction, he fears a «permanent decline» in London's competitiveness, «not just because of our tribe, but for the wider business of London and the native counties.
Or, to put it another way: death by a thousand cuts.
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