Business minister raises the alarm on the tourist tax, saying the government is 'very concerned' about its impact on companies

A Business minister yesterday revealed the Government is ‘very concerned’ about the impact of the tourist tax on companies.

Kevin Hollinrake said Cabinet colleagues would ‘make our views known very strongly’ to the Treasury as it reviews whether to reinstate tax-free shopping for overseas visitors.

Chancellor Jeremy Hunt pledged in last week’s Autumn Statement to ‘carefully’ consider industry evidence of the damage of the tax. His commitment marks a major victory for the Mail’s Scrap The Tourist Tax campaign, which has fought on behalf of scores of firms to demand the Government ditches the levy.

Research suggests the move could boost the UK economy by £10billion a year and support 200,000 jobs, with more than 400 businesses signing a letter demanding the Government rethinks its position.

During business and trade questions in the Commons yesterday, former minister Sir Desmond Swayne told MPs: ‘There are streets in the West End of this city important to our economy that would certainly benefit from the ability of tourists to reclaim VAT, aren’t there?’ 

Mr Hollinrake responded: ‘He raises a very important point and one that this department has looked at very carefully. We are very concerned about the impact of the withdrawal of that tax concession on business. Not just the businesses themselves, but the other businesses that rely on our foreign visitors, our hoteliers, our restaurateurs.’

He said the Chancellor had ‘committed to review the evidence to see what impact this was actually having. We will look at that evidence with great interest, and make our views known very strongly to the Exchequer.’

Mr Hunt told MPs he wanted to do ‘everything possible to encourage international visitors’. He added: ‘When we changed policy on this particular issue a year ago, it was because the cost was around £2.5billion a year and we didn’t think we could afford to continue doing it.

‘But we are looking again at the numbers in the light of the most recent data... we will review that and see if it is still that expensive – and I hope it isn’t.’

The Treasury scrapped tax-free shopping for overseas tourists in 2021. Liz Truss and Kwasi Kwarteng announced plans to reintroduce the VAT rebate last autumn, but Mr Hunt reversed the move soon after entering No 11 in September 2022. Campaigners believe the removal of the scheme is driving tourists away to cities such as Paris and Milan.