It costs money, jobs and drives foreign visitors away from London: apart from that, the tourist tax is a fine piece of Treasury policy. So it is with great relief that retail, hospitality and leisure businesses across the capital have greeted reports that the Chancellor, Jeremy Hunt, has ordered a review into the tax, paving the way for a reversal.
Hunt’s predecessor-but-one at No11, Rishi Sunak, ended tax-free shopping for tourists in 2020, meaning foreign visitors could no longer reclaim VAT on their purchases. Yet the only winners of this policy have been Paris, Rome and Madrid. Indeed, recent analysis from the Centre for Economics and Business Research reveals that the removal of tax-free shopping is deterring two million tourists each year from visiting the UK and costing the economy£11.1 billion in lost activity.
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