Business leaders urge Prime Minister Keir Starmer to scrap the tourist tax, projecting a £7 billion annual lift for Britain’s high streets and support for 140,000 jobs.
Call for VAT-Free Shopping Revival
Trade organizations, including the Heart of London Business Alliance, Association of Town and City Management, and Association of International Retail, warn that the current business rates system remains fundamentally broken. They advocate a complete overhaul to deliver an additional £2 billion in relief for high streets.
In a direct appeal to Starmer, these groups argue that reinstating a VAT-free shopping scheme for foreign tourists would establish Britain as Europe’s top shopping hub for international visitors, investors, and retail brands.
Projected Economic Gains
Fresh analysis indicates the policy reversal could recover £2 billion currently lost to EU destinations like Paris, Milan, and Berlin. It would also tap into a new market of EU shoppers, potentially generating £5 billion in spending on UK shops, hotels, pubs, and restaurants.
Major retailers such as Harrods, Primark, Marks & Spencer, Burberry, and Mulberry back the push. Post-Brexit, the UK stands alone in Europe without rebates for non-EU tourists, a scheme ended in 2021. Restoring it would extend benefits to 450 million EU residents alongside visitors from China and the US.
The groups call for a full government impact review of tax-free shopping as a cost-free show of support for struggling high streets.
High Street Struggles and Reform Needs
Recent closures by chains like River Island, Claire’s Accessories, and Poundland highlight mounting pressures. Business rates hikes from last year’s Budget drew widespread criticism, prompting limited relief—a 15 percent discount for pubs and music venues, but excluding restaurants, hotels, and cafes.
Industry voices demand structural reform over minor tweaks. They propose a 2 percent levy on online sales to slash all business rates by 35 percent, fostering fairness between physical stores and digital giants.
Helen Dickinson, chief executive of the British Retail Consortium, states: “The high street remains the centre of our communities… This tax is the final nail for thousands of boarded up shops, and a key factor when deciding whether to open new stores or close existing ones. If Government wants local neighbourhoods to thrive long into the future, it must make good on their promise for meaningful reform of the broken business rates system once and for all.”
