Many of you will have seen Monday’s Daily Mail front cover which splashed the results of an in-depth study into the impact of the removal of tax-free shopping in the UK. The study, by the highly respected Centre for Economics and Business Research (CEBR) found that the removal of tax-free shopping is costing the UK £10.7bn in lost GDP and deterring two million tourists a year.
What’s more, if the scheme was reinstated, for every £1 refunded in sales tax to international visitors, the exchequer would gain £1.56 in other taxes, thanks to the dynamic economic effects of visitor expenditure. The additional revenues generated would outweigh the losses Treasury associates with sales tax refunds by £2.3 billion.
The results of this study, commissioned by Rocco Forte Hotels and Watches of Switzerland in a campaign led by James Chapman of J&H Communications with Julia Carrick, OBE, a former Chief Executive of Walpole and a passionate champion of British brands, should be a salutory warning for government. UK business knows it can deliver exceptional incremental value to the exchequer, but it can’t do so with both hands tied behind its back by a policy that clearly isn’t working.
It has been nearly three years since Walpole and its members - in concert with other key lobby groups, not least Paul Barnes at AIR and NWEC - began the fight against the Government’s decision to axe tax-free shopping, a constant and indefatigable fight that shows the determination British retail and hospitality brands as well as major cultural institutions have to pursue the issue. It’s a campaign that has only grown in intensity in the media, underscoring business’s strength of feeling about the vital contribution of the tax-free shopping scheme to our visitor economy.
CEBR’s study confirms and builds on the findings of last autumn’s Oxford Economics study commissioned by AIR, which found that reintroducing TFS would lead to an increase in foreign visitor spending of over £3.1 billion and incentivise 1.6 million extra visitors to come to the UK.
The question we must now ask ourselves is how much longer must business keep on providing both robust, impactful data and case-studies about the damage this policy is doing to their brands and the country before the Government is prepared to listen?
I feel very strongly there is no point in waiting for UK business to go sour as a result of this decision. It’s crucial that we act now before the harm done to our competitive position versus other European countries is irreparable.
There is a business debate in the House of Commons on 7th September, and I urge every Walpole member affected by this issue to write to their constituency MP to ask them to attend the debate to highlight the impact on their business and their community.
We need to break out of the deadlock we have with this issue. It’s my opinion that the Government should come to the negotiating table: if reinstating the previous scheme is so unpalatable, let us work together to find a replacement that restores our competitive advantage and allows us to play our part in contributing so significantly to GDP at a time when the country surely sorely needs it.
It's time to act.
> If you would like any help with the letter asking your MP to attend the debate on 7th September, please email Jon Marlow, Walpole’s Senior Policy Manager, on [email protected]
