Tourist tax leaves London lagging behind EU rivals
The uber-competitive market for high spending tourists is being lost by London to its European rivals.
New data has confirmed what UK watch retailers have known for years, which is that the Tory government’s decision to scrap VAT-free shopping for foreign tourists in 2021 has left London (and other British cities) at a competitive disadvantage, as it’s the only country in Europe without the scheme.
New figures from tax-free shopping specialists Global Blue show that spending by non-EU visitors in the UK has levelled off at just 75% of pre-Covid levels. In contrast, spending has surged to 166% in Spain, 159% in France, and 137% in Italy compared to 2019.
Luxury tourist hotspots like Paris and Milan are the main beneficiaries, to London’s detriment. Tourist bosses reckon that the VAT refund in those cities make goods 15% cheaper than London, typically.
The problem also comes to the fore with the issue of EU visitors, who have been included from such a scheme even before Brexit.
Spending from the Gulf has been hit the hardest, which is particularly grim for luxury retailers in the UK, as traditionally these tourists were the ones who hoovered up expensive watches on a regular basis.
Not only do the draconian tariffs act as a deterrent to potential high-spending tourists, but they also incentivise Brits to travel abroad (Paris is just a train ride away, for instance) and buy their luxury handbag or watch elsewhere.
Over 500 business leaders have demanded a rethink on draconian and self-defeating “tourist tax,” but with the public finances in tatters and the UK government in a doom loop of fiscal tail-chasing, it’s politically very unlikely that Labour will want to be seen to be giving tax breaks to rich people when the Budget is announced.
