Why is the UK government sticking with its £200 million Tourist Tax error?

I have not written a Christmas wishlist yet, but I think that near the top for this year would probably be for the government of the UK to see sense on the Tourist Tax policy which has been hampering growth and damaging the retail and tourism industry in the country for two years now.

The Autumn Statement which was issued last month was a chance for the country’s politicians to roll back this foolish policy and make right the error. We know they recognise it is an error, because they almost repealed the decision last autumn. Instead, this year we got promises to look at the data again and review the policy. It is a step, but it is far too late.

I could not agree more with MP Sir Geoffrey Clifton-Brown, who called the government’s figures and thinking over the Tourist Tax “complete nonsense”. Many business professionals much more qualified than myself have been saying the same thing since last January. Sir Geoffrey’s speech underlined the deep failings in the Tourist Tax and, to me, highlighted further that those making this decision did not understand what they were doing or the impact it would have.

This year we got promises to look at the data again and review the policy. It is a step, but it is far too late

But, faced with this, I found the response from the UK government, and its Chancellor Jeremy Hunt, to be as disappointing as these things usually are. He promised they would look at the data again – how much more data do they need to consider?

The data is overwhelming. Figures from the Association of International Retail (AIR) show that the cost of the Tourist Tax already amounts to £6.5 billion in lost sales and £206 million in revenue for the UK Treasury. On top of that, the Centre of Economics and Business Research (CEBR) reports that the move has cost the country £10.7 billion in GDP thanks to lost business by creating a less attractive market for shoppers.

Surely numbers like that show that a policy which claimed to be helping the UK’s finances is failing. But there is more. Global Blue reported this summer that the UK is now less attractive to high-spending shoppers from the US, Middle East and Southeast Asia, and stores in the UK have recovered to 64% of pre-Covid spend, compared to 79% in Italy and 104% in France.

20partners 77292649-0-image-m-27_1698875270328 Why is the UK government sticking with its £200 million Tourist Tax error? Journal  Tourist Tax

Furthermore, according to The Telegraph, wealthy visitors are returning to the UK to visit now, but they are doing their shopping in Paris. There is the clearest proof there is.

So, the questions is, why delay further? Faced with such clear evidence of a policy misfire, why not act immediately? Promising to look at figures in one thing, but AIR were correct in their response to the Chancellor’s comments: we need more than promises, we need immediate action.

Heathrow’s Fraser Brown put it best, as reported in The Moodie Davitt Report, when he said:  “With Santa’s sleigh primed and ready to deliver for Christmas, it’s an act of economic vandalism that this wrongheaded policy means he’ll be stocking up on his presents in France, Italy and Spain, rather than the UK.”

Economic vandalism is the right term. So, we must hope that Santa can deliver some sense for the UK government this holiday season – in the meantime, the rest of us must continue calling for change.