Heathrow’s bosses have told ministers they ‘must reinstate’ VAT-free shopping as visitors to France and Spain spend more than double what they do here.
Europe’s busiest airport said British businesses are ‘losing out to neighbours’ as the Government refuses to budge on the so-called tourist tax.
Whilst spending by American tourists in the UK has returned to pre-pandemic levels, their shopping has doubled in Spain and France and is now at a respective 201 per cent and 226 per cent of 2019 levels, according to data from tourism shopping tax refund company Global Blue.
Shoppers from across the Atlantic are also spending nearly twice as much in Italy as they did before lockdown, reaching 190 per cent of 2019 levels.
This trend has played out with visitors from the Middle East and Southeast Asia too, who are continuing to splash less cash on British goods than in other European hot spots.
Heathrow’s bosses have told ministers that British businesses are ‘losing out to neighbours’ as the Government refuses to budge on the so-called tourist tax
This sparked concerns that London could fall behind the likes of Paris and Madrid.
Heathrow is among more than 200 businesses to have backed the Daily Mail’s Scrap the Tourist Tax campaign.
Household names such as Harrods, Burberry and Marks & Spencer are also behind the campaign. VAT-free shopping was abolished by Rishi Sunak when he was Chancellor in 2021.
It means that overseas shoppers are no longer entitled to a 20 per cent refund on their shopping basket.
While countries in Europe charge VAT, they also offer a refund for overseas visitors who take purchases home.
There is growing unease that the loss of the tax break in Britain is a major own-goal, with the tourist tax hitting the UK economy while boosting sales in the EU.
A Heathrow spokesman said: ‘Government must reinstate tax-free shopping to let British businesses and the UK economy maximise the benefits from recovering markets, instead of losing out to neighbours in France, Italy and Spain.’
Some 99pc of shops and restaurants spaces in the airport were in use prior to the pandemic but the level stands at just 95 per cent today – with Heathrow laying the blame firmly on the tourist tax.
Bosses of 20 airports, including Gatwick, Edinburgh and Belfast, have also put pressure on the Government to reinstate the tax break.
Critics say that – far from the Treasury’s claim that scrapping the tourist tax would cost £2billion a year – there would be a net gain of around £350million.
A study by advisory firm Oxford Economics suggests the move would bring a £4.1billion boost to the economy and support 78,000 jobs.
Tourists left feeling ‘isolated and penalised’, says Savile Row’s first female master tailor
Savile Row’s first female master tailor has warned that tourists feel ‘isolated and penalised’ by the UK because it is shelving a VAT-free shopping scheme.
Kathryn Sargent has joined designer fashion houses Burberry and Mulberry in backing a Mail campaign to get rid of a hated ‘tourist tax’.
Sargent, who has made suits for members of the Royal Family, said that the tax was ‘driving spend’ away from London’s illustrious Mayfair and towards rivals in Paris or Milan.
Cut the tax: Savile Row master tailor Kathryn Sargent has joined designer fashion houses Burberry and Mulberry in calling for VAT-free shopping for tourists
The capital is failing to welcome tourists just as it needs to entice them back after the pandemic, she added.
She urged the Government ‘to understand that psychologically [scrapping the tax] really means a lot to our international customers’.
‘You don’t want them to feel cut off from travelling as they feel they are not valued by our Government,’ Sargent told the Mail.
‘They know their business is valued by me, but it has quite a broad psychological impact on the mindset of that customer. I am seeing that first hand.
‘I don’t see a benefit to this decision, there is more loss than gain.’
Sargent called on ministers to acknowledge that the tax did not just impact ‘luxury people’ who are rich and so ‘can afford it anyway’.
Instead, she urged the Government to consider the tailoring employees behind the scenes in workrooms, ‘who are everyday, normal people.’
Tourists also support the entire economy when they visit London, Sargent said.
‘They are staying in hotels, going to the theatre, doing things tourists would usually do,’ she added.
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