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1 year ago
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Businesses demanding the end of the 'tourist tax' were given a glimmer of hope yesterday as the Chancellor vowed to review it.
In a victory for the Mail's campaign to bring back tax-free shopping for overseas tourists, Jeremy Hunt said he would 'carefully' consider evidence of its damage.
High street brands and the bosses of major hotels, restaurants and theatres have been pressing Mr Hunt to ditch the tax to boost the economy.
Research suggests the move could make the UK £10billion a year better off and support 200,000 jobs. More than 400 businesses have signed a letter demanding a rethink.
Yesterday the Chancellor said he would review the most recent data to see whether he could afford to scrap the tax.
Mr Hunt told MPs he wanted to do 'everything possible to make our tourism and our retail industry competitive and we want to encourage international visitors'.
Mr Hunt told MPs he wanted to do 'everything possible to make our tourism and our retail industry competitive and we want to encourage international visitors'
Jeremy Hunt vowed to 'review' the tourist tax 'in light of the most recent data'
'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,' he said.
What was in the Autumn Statement?
National insurance cut: £10bn a year
The headline rate for employees is being reduced from 12% to 10%, putting more hundreds of pounds in the pockets of 27million Brits.
For the self-employed, Class 2 contributions are being abolished and Class 4 contributions reduced from 9 per cent to 8 per cent.
Making 'full expensing' permanent: £10bn a year
Businesses have been benefiting from rules that mean they can claim back tax on investment in plant and machinery.
That is due to end in 2026.
State pension to rise 8.5%: £2bn
The Chancellor is sticking to the triple lock that ensures pensions rise by the highest out of inflation.
Benefits to rise 6.7%: £3bn
Mr Hunt had considered increasing benefits by the lower October inflation figure of 4.6 per cent, rather than the September number usually used.
However, he has opted to stick with convention and push for more people to re-enter the workplace.
Living wage to rise to £11.44: n/a
The national living wage will rise by 9.8% to £11.44 in April.
The rate is currently £10.42 for workers aged over 23, but the new figure will apply to 21 and 22-year-olds for the first time.
'But we are looking again at the numbers in the light of the most recent data and we can see what has happened to comparative shops in Paris and Milan, and we will review that and see if it is still that expensive – and I hope it isn't.'
The Treasury's official 'green book' issued alongside the Autumn Statement thanked businesses who had already submitted evidence of the impact of removing of VAT-free shopping.
It said: 'The Government will continue to accept representations and consider this new information carefully, alongside broader data.'
It is understood the Chancellor insisted his statement contained a reference to the demands to scrap the levy.
Campaigners last night welcomed Mr Hunt's pledge to review the tourist tax, but urged him to go further and scrap it at the spring budget.
Leading hotelier Sir Rocco Forte, who organised a letter to the Chancellor signed by more than 400 businesses, said: 'Business is as one on the issue of the tourist tax: it is damaging the whole economy, putting jobs at risk and hampering growth.
'There is clear evidence that the removal of tax-free shopping is costing the economy £10.7billion in lost GDP and deterring two million tourists a year.
'So it is disappointing that the Chancellor chose not to act yesterday, meaning businesses in the hospitality, retail, tourism and arts sectors will go into the crucial Christmas season with one hand tied behind their backs.
'However, we are very encouraged by the fact that he has confirmed that the Treasury has now agreed to look again at the numbers on this issue.'
The Association of International Retail called for a 'clear framework and timescale' for the Chancellor's review.
Its chief executive Paul Barnes said: 'The losses made in 2022 are set to be even worse in 2023 as international visitors divert more of their spending away from Britain.
'We need to move fast before all the customer goodwill and loyalty that Britain has built up over decades gets transferred to France, Italy and Spain.'
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