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Business leaders are making a last-ditch attempt to persuade Jeremy Hunt to remove the tourist tax from his budget this week.
As the Chancellor puts the finishing touches on tomorrow’s statement, the Marks & Spencer boss joined a leading London jeweler and an executive at the O2 music arena to call for VAT-free shopping to be restored for overseas visitors.
And lobby group BusinessLDN warned that UK businesses are operating at a “major competitive disadvantage” because tourists are not benefiting from the same discount they get in France, Italy, Germany and Spain.
But there are fears that their calls will fall on deaf ears despite more than 500 companies backing this newspaper’s campaign to abolish the hated tax.
The Treasury believes scrapping the tourist tax, which was introduced by Prime Minister Rishi Sunak when he was chancellor in 2021, would cost £2bn a year in lost revenue.
The Marks & Spencer boss has joined a leading London jeweler and an O2 Music Arena executive in calling for VAT-free shopping to be reinstated for overseas visitors.
But campaigners say this does not take into account the huge amount tourists spend on hotels and restaurants, theater visits and museums.
Economic consultancy the Center for Economics and Business Research (CEBR) estimates the tax is costing the economy £11.1bn a year, as tourists flock to rival shopping destinations such as Paris and Milan.
Warning that government policy means running a business in the UK “is like walking down an escalator with a rucksack on your back”, M&S chief executive Stuart Machin said the tourist tax “must be reversed” .
“Have no doubt that cities like Paris and Milan are making the most of it,” he said. ‘It is deeply felt in our capital, London.
‘Everyone knows the sad state of Oxford Street, once the UK’s leading shopping destination. We must do everything we can to restore the street to its former glory and recapture that lost passage.’
Janine Constantin-Russell, general manager of entertainment and retail at London’s O2 stadium, said the UK’s position as a tourist destination for shoppers has “completely fallen off a cliff” since the tax was introduced.
Although music lovers have returned to concerts in droves since the pandemic, the O2’s 60 stores are losing extra money from international visitors, he said.
Warning that consumers are “going elsewhere in Europe to get their high-value items and spending that excess in another country”, he added: “At the core, we are saying give us a chance to help our economy.”
Susannah Lovis, who has run a jewelery store in her name in Burlington Arcade in Mayfair for 25 years, called the tax “appalling”.
Lovis, whose jewelery has been worn by the Duchess of York and TV presenters Christine Lampard and Holly Willoughby, said the tax is hurting businesses almost every day.
“We have had many tourists who were about to buy high-value items and then found out they couldn’t claim the tax and took the Eurostar to Paris to buy them there,” he said.
‘This happens to us almost daily. One memorable occasion was when a princess from Saudi Arabia came into the store wanting to buy an expensive piece of jewelry and gifts for her family.
When he discovered he couldn’t reclaim the VAT, he left the store.
“It was an appalling decision by the Treasury to prevent tourists from claiming this tax and it has affected our business greatly.”
Mr Lovis added: “I shudder to think how many millions of pounds other businesses have lost because the visit is so much less attractive to tourists.”
“If you look around Mayfair, there just aren’t as many shopping bags as in previous years.”