Weeks after the decision to return VAT-free shopping for overseas visitors was declared “a great victory” by business leaders, a U-turn by the Chancellor announced today sees this plan scrapped.
The perk, which would allow tourists and other foreign visitors to claim back the 20 per cent VAT paid on purchases made in the UK, was scheduled to be reintroduced as part of former Chancellor Kwasi Kwarteng’s mini-budget delivered last month.
Newly appointed Jeremy Hunt, however, reversed this plan, saying that tax-free shopping would be unaffordable for the taxpayer and therefore must be put on hold.
Business leaders have spoken out against the move, claiming it would harm the UK’s competitiveness as a destination to spend.
Chair of UK Travel Retail Forum, Nigel Keal, said: “The Government’s latest U-turn on tax-free shopping is a huge blow to the travel retail industry and the airport community.
“The UK is one of the only major economies not to have a VAT-free shopping scheme in place, making us globally uncompetitive.
“We appreciate difficult decisions must be made, however as the economic situation worsens, and the cost of living crisis threatens to impact international travel, we urge the Government to reserve judgment until it has carried out a full cost-benefit analysis.”
Paul Barnes, chief executive of the Association of International Retail, shared similar discontent: “The decision to reverse plans to reintroduce VAT free shopping for international visitors will come as a hammer blow to UK tourism and the British high street.
“This short-sighted move is based on inaccurate and incomplete projections, and risks putting a brake on the return of international visitors who are vital drivers of economic growth throughout the UK.
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