Westminster Tories hit out at tax on foreign shoppers that ‘will hit the West End’
By Owen Sheppard, local democracy reporter
Westminster Tory councillors have heavily criticised the Government’s decision to impose taxes on goods bought by foreign shoppers.
Until 2021, tourists from outside the EU could claim a VAT refund on any retail purchases made in the UK.
The policy was thought to have helped the West End become a magnet for fashionistas from China, the Middle East and around the world.
But the Treasury went ahead with the change, despite lobbying from bosses of Chanel, Fortnum & Mason, Paul Smith, and Harrods, as well as fears it would choke off London’s economic recovery after the pandemic.
Councillor Matthew Green, Westminster Council’s cabinet member for business, said he hoped the Government would do a “u-turn” once the “genuine negative effect on tourism numbers” had been realised.
During a scrutiny and accountability meeting on April 26, councillor Lindsey Hall said: “The West End used to be such a magnet for Chinese shoppers, for example, and with the abolition of the refund of VAT I see that as a very punitive move.”
She asked Mr Green if he had been lobbying the Chancellor Rishi Sunak to reverse the policy.
Mr Green replied: “We certainly have but I am afraid to say thus far it has fallen on deaf ears and it really [affects] Westminster, London, and the country as a whole.
“Because people are coming to spend money in the UK. They don’t just spend it in Westminster, they spend it in the Lake District, they spend it in Edinburgh, they spend it around the medieval streets of York.”
“So I think it is a short sighted decision and I do hope that when our competitive disadvantage against our competitor cities… because they are competitor cities, such as Paris or Rome or Madrid… When this does have a genuine negative effect on tourism numbers, I really hope that will be the point where the Treasury decides to do a u-turn on this unfortunate issue.”
Business groups had told the Chancellor last year that the tax could cost 40,000 British jobs and £1 billion of investment.
The Treasury has previously said that the tax-free shopping disproportionately benefited London and that “around 92 per cent of visitors to the UK don’t use the VAT Retail Export Scheme”.
It also said tax-free shopping is still available in-store when goods “are posted to overseas addresses” rather than taken home by tourists in their luggage.
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