Norman McKenzie-Richmond is Chairman of the Together for Tourism Alliance
As the country enters a new lockdown, the only certainty for businesses is that their struggle to survive will continue into 2021. Any lingering hopes of a ‘v-shaped’ bounce-back have disappeared as Covid-19 cases rise and the government attempts to bring the R-number back below one.
The impact of the second lockdown will be severe, Deutsche Bank predicts GDP could shrink by as much as 10 per cent in November, when the new restrictions take hold.
But unlike many on the pages of ConservativeHome, I remain optimistic for the future of the UK economy, perhaps not in the short term but certainly once we have adapted to and learned to live with Covid-19.
If the Government can successfully navigate the new post-Brexit order, then in a post-pandemic world we have the potential to demonstrate what a truly global Britain can be. Freed from the shackles of Brussels, there is no limit to what this country can achieve.
Which is why it’s so incomprehensible that the UK is about to embark on a path that could cripple large parts of the economy at the very time it is most vulnerable. On January 1, 2021 Britain will become the only country in Europe not to offer tax-free shopping to international visitors.
Some might think this is a niche issue affecting only high-end boutiques in the West End of London, but they couldn’t be more wrong.
The total annual spending by international visitors is more than £22bn. This ill-thought-out change will impact tourism, hospitality, and retail in every corner of the UK. With minimal consultation and even less scrutiny, the Government risks losing £10bn in tourist sales to our EU neighbours.
Emmanuel Macron is already seeking to capitalise on the proposed changes: the very day they come into effect the French will reduce the minimum spend for tax free spending from €175 to €100.
The numbers speak for themselves. Last year there were 40m international visitors to the UK, and they spent around £6bn in UK retail. That’s a massive contribution to an industry that employs more than three million people.
Then there is the travel and tourism sector. In the UK it provides 1.5m jobs, generating benefits in every region of the UK and £230bn for the economy. Foreign visitors that take advantage of tax-free shopping do pay VAT when they sleep in our hotels, eat at our restaurants and enjoy our arts, culture and heritage.
The UK has a unique global brand, its cultural and historical offerings are one of the key draws for foreign tourists. But tourists also love to shop, they are increasingly price-sensitivem and if they believe they can save money by shopping in Paris, Milan, or Amsterdam they will.
As we enter the uncertainty of 2021, the Government must ensure our tourism, hospitality, and retail industries are able to rebuild and compete with their rivals in the EU. It makes no sense to deliberately hobble key UK industries that provide millions of jobs and billions in tax receipts to the exchequer. Dropping the changes to the VAT Retail Export Scheme would protect jobs and provide a huge boost to the very parts of the economy that will help forge the new Global Britain.
Extending tax free shopping to EU citizens after Brexit would bolster the UK’s reputation as the destination of choice for tourists both in Europe and in the rest of the world. That’s why I have formed the Together for Tourism Alliance to campaign for the Government to drop the shop tax and protect thousands of jobs.
The VAT Retail Export Scheme is currently implemented through international visitors filling out paper-based forms at airports and ports as they leave the UK. Yet France, Spain, Portugal and Italy have already introduced fully digitised solutions to the VAT Retail Export Scheme.
If the government listens to our campaign and the proposed changes are reversed, the Together for Tourism Alliance stands ready to act as a partner for government to develop a fully digital end-to-end solution for the UK. This technology has already been developed by our private sector partners and could be implemented at scale with no cost to the taxpayer.
I decided to take a stand after my youngest daughter told me in September that she was about to lose her job because of the change to the VAT Retail Export Scheme. She explained that her job – and thousands across the UK – were now in jeopardy. I was in disbelief: How could a Conservative government, which I believed to be low-tax and pro-business, position the UK as the only European country without tax-free shopping incentives?
As the Treasury looks to navigate this period of immense uncertainty, there is an opportunity for it to undo something that will damage the economy when it is at its most vulnerable. It is the right thing to do. It is the Conservative thing to do.
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