Abolish 'ridiculous' tourist tax ahead of Paris Olympics, says Hunt

Retailers have protested against Rishi Sunak's decision to scrap VAT relief for tourists. Photo: Paul Grover

Jeremy Hunt must scrap a «ridiculous» tourist tax ahead of the Paris Olympics or Britain risks missing out on Europe's spending boom, luxury retail bosses have warned.

In an open letter to the Chancellor, retail chiefs warned France is poised to poach UK spending during this summer's Olympics unless Mr Hunt reintroduces duty-free shopping for tourists in his upcoming Budget.< /p>

Sasha Zakaria, chief executive director of tax refund group Prosegur ChangeGroup, said: «It was ludicrous to impose this fine on the sector as it desperately needed to recover from the pandemic and it is holding back thousands of businesses that rely on tourism.» /p>

“This destructive tax must be scrapped in the Budget in March and the previous simple tax refund solution must be reinstated before the Paris Olympics.”

The letter was signed by more than 400 business leaders, including designer Sir Paul Smith and the heads of the Royal Opera House, Burberry, Harvey Nichols and Jimmy Choo.

Mr Zakaria's comments were made by the Center for Economics and Business Research (CEBR) published new estimates showing the UK gained more than expected hit by tourist tax.

The think tank said the policy cost Britain £11.1 billion in lost GDP last year, £400 million more than previous expectations of £10.7 billion.

Tom Athron, chief executive of Fortnum & Mason warned in November that the retailer was bracing for a tough summer. He said tourists who may have decided to come to London during the Paris Olympics to shop without the tourist tax are now likely to choose to buy their designer goods on the continent. Unlike the UK, tourists can still claim VAT back on purchases in countries such as France, Italy and Spain.

It comes after a recent study found tourists were still flocking to London's shopping centers but not spending any money. Earlier this month, Mulberry blamed a tourist tax for contributing to a fall in revenue following the closure of its Bond Street store last year.

The Treasury has previously said that restoring VAT-free trading would cost Britain around £2 billion a year, hampering efforts to pay down the debt.

However, Mr Hunt recently said he would continue to accept applications and carefully consider This new information comes despite concerns that UK brands will be hit hardest by the measure.

Insiders suggested it could mean the Treasury will review the policy again. for the Spring Budget.

A Treasury spokesman said: “We have all taxes under control and recognize the value that retailers bring to the UK. That's why we announced a £4.3 billion business rates package at the Autumn Statement to support businesses and the high street.

“VAT free shopping continues to be available to all non-UK visitors , buying goods in a store and purchasing them. sent directly to their overseas address.»