West End retailers miss out on 220 million pounds due to 'tourist tax'
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It is no secret by now that retailers across London remain unhappy about the UK government’s decision to scrap tax-free shopping incentives for tourists. The resulting impact of the move was further emphasised in a new report by the New West End Company (NWEC), which represents the retail landscape for the West End district of London.
In its Autumn Budget 2024 submission, with which it provides a number of suggestions for the government to consider in its incoming economic policies, the NWEC once again underlined the issues surrounding the current “tourist tax”, as it's often referred to. While the organisation noted that visitors to London had increased 3 percent in the first half of 2024, spending in the West End area had “sharply declined”, dropping nearly 12 percent compared to the same period in 2019, pre-pandemic.
This, as such, has reportedly cost retailers in the West End 220 million pounds in the first half of 2024 alone, and a total of 400 million pounds last year. With this in mind, such figures could also impact the way in which investors perceive the sector. NWEC added that a survey it conducted this time last year found that 54 percent of businesses in the West End were reconsidering UK investment as a result of losing VAT-free shopping.
The move has particularly impacted luxury retailers, which are said to be losing out on sales from international shoppers, who are instead turning to France and Italy, where tax-free incentives are still in place. Tax-free refunds in Continental Europe have surged 36 percent in the first half of 2024, while UK businesses are left tackling disadvantages, NWEC commented.
With this, the company has called on the government to reinstate the Retail Export Scheme and bring back tax-free shopping for overseas visitors to the UK. This also requires a “holistic review of the policy”, while taking into account the net new EU market. Other policies the NWEC put forth in its submission include;