Heathrow has accused Rishi Sunak of having “closed the door” on local growth when he introduced the “tourist tax”.
The Prime Minister scrapped a duty-free shopping scheme for international visitors in 2020, when he was Chancellor, despite protests from many leading businesses.
It now faces pressure to announce a U-turn after companies said they were missing something.
Yesterday, Heathrow, Europe’s largest airport, warned that the UK’s reputation was at stake and accused the Prime Minister of “turning away international buyers”.
It is one of hundreds of businesses urging Chancellor Jeremy Hunt and Sunak to scrap the tax in next month’s Spring Budget.
Under fire: Rishi Sunak scrapped a duty-free shopping scheme for international visitors in 2020 when he was Chancellor, despite protests from businesses.
A Heathrow spokesman said yesterday: “While exports are booming, Britain has closed the door on domestic growth, turning away international buyers through the tourist tax and tarnishing the UK’s reputation as a competitive country to spend and make.” business”.
More than 400 prominent business leaders have called on the Government to U-turn, as part of a campaign by The Mail.
In a victory for The Mail, the Government’s economic watchdog, the Office for Budget Responsibility, has opened an investigation into whether reintroducing duty-free shopping will cost more than it raises.
Heathrow’s comments came as it said 6 million traveled through the airport in January, up 9.4 percent compared to the start of 2023.
But data shows that while tourists are returning to the country post-Covid, they are slowing down their spending compared to other European countries.
Heathrow has warned that global retailers are veering away from the travel hub because of the tax and instead setting up stores at airports in Paris, Amsterdam and Milan.
In May, the airport said it was forced to close 18 stores run by luxury designers, including Mulberry and Rolex, “in direct response” to the tax.
Daniel Platt, head of public affairs at Heathrow, added: “We still have stores closed, we have space that retailers are not willing to occupy, which is not a situation we find ourselves in in 2019.
“The UK’s competitiveness has eroded since 2021. Big-spending visitors have turned to European competitors and spent there.
Chinese passengers in particular have voted with their wallets, not necessarily their feet, but they are spending less.’
Heathrow’s tough words echo other industry warnings that the UK is losing its competitive edge against rival destinations such as Paris and Lisbon.
Concerns: Heathrow Terminal 5. The airport is calling on the government to scrap the so-called “tourist tax” in next month’s spring budget.
Bosses argue the impact of the tax is being felt outside of luxury hotspots Bond Street and Bicester Village, and that transport providers, restaurants and museums will also be affected.
Ministers have tried to dismiss business leaders’ concerns by arguing that duty-free shopping benefits only luxury brands and wealthier bargain-hunting tourists.
But a new analysis cast doubt on the government’s earlier estimates of the economic fallout.
Last week, the Center for Economic and Business Research suggested the tax was costing the wider economy more than £11bn, as wealthy tourists divert to cities such as Paris, where tourists can shop tax-free. taxes.
A number of business leaders have spoken out against the tax, including Neil Clifford, head of luxury footwear brand Kurt Geiger, who described it as a “schoolboy mistake”.
Clifford told The Mail last week: “Those international visitors are simply spending a lot more time in other cities.”
Fashion designer Sir Paul Smith said the campaign to scrap the tax was not about “helping wealthy shoppers who come to buy cheap handbags” but to boost the wider economy.
But the Treasury claims reinstating the benefit would cost the Treasury £2bn a year.