British heritage brands are “suffering financially” because of a lack of VAT-free shopping for tourists, the leader of the Scrap the Tourist Tax campaign has said.
Speaking at a parliamentary debate, Conservative MP Sir Geoffrey Clifton-Brown said that London’s retail and hospitality businesses have been abandoned by tourists in favour of mainland European destinations.
“International travels buy more goods from brands and the countries they are visiting, so British brands like Mulberry, Burberry and Church’s are suffering the most”, he told attendees.
“Mulberry has already had to close its flagship Bond Street store, which it blames solely on ending tax-free shopping.”
The luxury brand left its Bond Street store in February, slamming the lack of VAT-free shopping for tourists as well as high business rates and rents as reasons for its departure.
Clifton-Brown said the UK was missing out on a £1bn ‘Brexit boost’, as tourists opt for other destinations.
The UK is currently the only country in Europe which does not offer VAT-free shopping for international visitors after the scheme was scrapped following the finalisation of its exit from the EU in 2020.
The so-called ‘tourist tax’ has had a greater impact on businesses in the West End than the cost-of-living crisis, according to a New West End Company (NWEC) study.
The group found that 92% of surveyed businesses said they have been affected by the loss of VAT-free shopping, in comparison to 58% who said they had been impacted by the cost-of-living crisis.
Of those who said they had been affected by the ‘tourist tax’, 72% reported a decline in visitor numbers whilst 89% said that they had seen a fall in spending from international visitors.
The survey found that West End businesses are now reconsidering whether to invest in the UK, with 21% considering UK closures or moves to other countries.
Clifton-Brown, who leads the Scrap the Tourist Tax campaign on behalf of the Association of International Retail (AIR) and the NWEC, has called for an urgent independent inquiry into the total financial losses to the UK economy caused by the scrapping of VAT-free shopping.
However, these calls were countered by Labour MPs. shadow exchequer secretary’s Tanmanjeet Dhesi said: “We do not believe that reinstating tax-free shopping for international visitors should be a priority for the billions of pounds of public money.
“Although we are not calling for VAT-free shopping to be reinstated, we firmly believe that retail and hospitality businesses particularly – those concentrating on our high streets – need support from the government.”