Rishi Sunak’s tourist tax will cut jobs, delay economic recovery from coronavirus


Ssince the referendum, the Brexiteers have vowed that leaving Europe would allow Britain to become a super-competitive world power.

Freed from EU trade rules and regulations, we would be able to unleash our potential to gain new customers from all over the world, far beyond the borders of Europe.

Yet the Chancellor, a longtime Eurosceptic, is pushing for massive changes to VAT rules that will make Britain much more expensive for high-spending tourists on whom hundreds of thousands of British jobs depend.
Jobs in retail, hospitality and design you just spent billions of pounds on leave payments.
In four weeks, new laws will end the decades-old duty-free regime for travelers from outside the EU. The result will be to make their purchases here 20% more expensive.

We will be pretty much the only country in Europe not to offer such advantages to tourists. The government said the move would help fix the country’s finances by saving £ 524million, touting it as closing a tax loophole for the rich in London.
But it’s a wrong number.
In fact, it will have the opposite effect; deter visitors from all over the UK and cost thousands of jobs.
How does this help us fight the Covid economic crisis?

Tourists will go elsewhere

Stores, designers and tourism chefs believe the tax will deter visitors from coming to Britain and send them to Paris and Milan.

The majority of non-European tourists belong to their country’s burgeoning middle class. They are not Asian tiger billionaires or sheikhs and princelings. They are extremely price conscious.
And the difference they will see in UK prices is huge. For a £ 10,000 watch at a Bond Street jeweler, buyers will lose a £ 2,000 VAT rebate. On a £ 1,000 Burberry coat, £ 200.

Ministers believe that tourists are not that fickle. They say people will always come in their hordes because the pound is so low. This argument makes no sense.
Customers on Oxford Street
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It’s a reference to the fact that when the pound collapsed after the Brexit referendum, UK tourism numbers hit record highs as Britain became a low-cost option.
But more than anything, it shows that foreign travelers are price conscious.

He also assumes that the British pound will always remain weak under Brexit.
It’s a strange sight for a pro-Brexit government. The pound is weak because global investors believe leaving the EU will hurt our economy in the long run. If Brexit is such a good idea, its supporters should expect the economy to thrive, raising the pound and reversing the currency’s shrinking effect on UK prices.

France is already benefiting

The proof of the illogicality of British thought has been amply revealed by French President Emmanuel Macron.
Days after Britain announced the plan, he said visitors should come to France instead and reduced the value of goods on which VAT can be reclaimed from 175 euros to 150 euros.
Ireland is considering something similar.

Treasury math is all wrong

When Rishi Sunak announced the move in September, he said Britain would recover £ 528million in taxes.
Even if this were correct, such savings are minimal in terms of cash flow and will be repeatedly offset by lost taxes for tourists who stay away.

Taking into account all the lost spending in hotels, restaurants and shops, the actual loss to the Treasury will be around £ 3.4bn and the total loss to the UK economy around £ 6bn. pounds sterling, according to analysts at Global Blue.

If you could buy a handbag for 20% less in Paris, why not you?

Anne Pitcher, Managing Director of Selfridges

Selfridges has stores in London, Manchester and Birmingham and we welcome international customers throughout the year.

We know what our customers want and we have invested millions of pounds in our business and created thousands of jobs to meet those needs.

We know, for example, that our Chinese customers are price sensitive and choose their travel destinations based on available purchases.

If you could buy a handbag for 20% less in France, why not you?

We know from our Middle Eastern customers, who like to eat in London and stay in hotels, that they will shorten their stays here to spend more time in Europe.

Visitors come to the UK for shopping, but they also come for the culture and hospitality.

We are just one part of a much larger tourism ecosystem that welcomes and supports visitors to the UK.

Instead of building back better, the consequence of canceling duty-free purchases, as explained to the government, is that around 40,000 jobs will be created by these industries.

The Treasury dismissed concerns raised by retailers and businesses and refused to accept figures provided by respectable sources.

Following the expenditure review, the Office of Fiscal Responsibility reported that the Treasury had overestimated the savings to the Treasury and that even the lowest estimate was “highly uncertain”.

We call on the government to do everything in its power to make the UK competitive and attractive as people start to travel again.

As we end an extraordinary year with Brexit, we ask the Treasury to take a break and reconsider the decision to cancel duty-free purchases.

The government’s figures were challenged last week by its own Office of Fiscal Responsibility. In the small format with the full review of Sunak’s spending, the OBR said the short-term savings would only be £ 350million, not £ 528million.
The Treasury Select Committee has written to Financial Secretary Jesse Norman expressing deep concern over why the government has still not released an appropriate impact assessment for such an important measure. What do they have to hide?

Jobs to lose in the UK

The government is launching the movement to its newly found constituents in the North as a way to tweak wealthy London’s taxes. He says the focus groups approve of it.

But the loss of these big-budget tourists risks creating tens of thousands of jobs across the UK. While 60,000 will go to London, thousands more will be affected in shops, hotels and restaurants in other tourist hotspots. York, Manchester, the Cotswolds, Edinburgh.
It’s not just stores that will suffer. Thousands of skilled artisans who make luxury goods in the UK will be affected. Mulberry manufactures its handbags in Somerset. Burberry and Barbour make coats in Yorkshire and Tyne and Wear. Church’s makes its shoes in Northampton. These are the same items that tourists love to buy here.


The Treasury argues that it cannot reverse the decision to remove the tax exemption for non-European visitors, as that would mean extending it to the rest of the EU after Brexit. We would lose 900 million pounds in taxes, he said.

But, as with its fake figure of £ 528million, that ignores the fact that if we offered them duty free, more would come, increasing hotels, restaurants and shops, and bringing in additional taxes. .

Why not, as we leave the EU and try to extricate ourselves from the economic nightmare of Covid, give the country a boost for new spendthrift tourists to soften the blow?
The whole idea was rushed with virtually no consultation. At the very least, it should be suspended until alternatives can be considered.

Kicking traders, chefs, and artisans when they’re down just doesn’t make sense.


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