Tax-free shopping debate in parliament
Thursday 7 September: MPs debated tax-free shopping for international visitors in a Westminster Hall debate – it can be watched again here.
Geoffrey Clifton-Brown MP, who called for the debate, opened proceedings. He cited data from reports by Oxford Economics and the CEBR on the economic benefit of bringing back tax-free shopping, including an extra £1.3 billion in revenue for public services. He made the point that the beneficiaries of bringing back tax-free shopping are not just retailers in London – it would be cross-sectoral, including culture and hospitality, and UK-wide. He ended his speech by calling on the Government to commission an independent assessment of the policy.
Nickie Aiken MP also cited the Oxford Economics and CEBR reports, adding that bringing back tax-free shopping is a good chance to kickstart growth on our high streets, and that tax-free shopping is a perfect example of conservatism, whereby cutting taxes can increase revenue. She said that there has been an impact on indirect spend on theatres, bars, and other tourist attractions. With many tourists now choosing Paris instead, we must do all we can to keep London as the number one destination. She ended by saying that tax-free shopping is the missing piece in the jigsaw of the Cities of London and Westminster, which fits together as an impressive destination.
Richard Thompson MP responded on behalf of the SNP. He spoke supportively of bringing back tax-free shopping, focussing on the benefits that it has across the UK, and not just in London, specifically in Aberdeen Airport in his constituency. He echoed calls for HM Treasury to commission an independent assessment.
Tan Dhesi MP, newly appointed as the Shadow Exchequer Secretary, responded on behalf of the Labour Party. He said that whilst tax-free shopping would not be a priority for an incoming Labour Government, they would like the Government to publish more up-to-date statistics. He added that Labour will keep listening to industry on this issue.
Victoria Atkins MP, Financial Secretary to the Treasury, responded on behalf of the Government. After clarifying some of the terminology used in the debate, she set out why HM Treasury and the Office for Budget Responsibility disagrees with aspects of the methodology used by Oxford Economics and the CEBR, notably around the assumptions on the number of tourists that would come to the UK as a result of reintroducing tax-free shopping. She referenced various policies that the Government has introduced to promote tourism to the UK. She said that the Government keeps VAT policies under constant review, encouraged businesses to keep submitting evidence to HM Treasury on the impact of abolishing tax-free shopping, and that she will “reflect carefully” on the calls for an independent review.
What happens now?
As part of the tax-free shopping campaign, we will now go through the Financial Secretary’s response in detail to see how to best address her concerns with the methodology used by Oxford Economics and the CEBR.
We need as much evidence sent to HM Treasury on the negative impact of removing tax-free shopping. The Association of International Retail set out here how this can be done.
We have members of the tax-free shopping campaign speaking at our next public affairs steering group on Wednesday 13 September at 10-11am. If you would like to attend, please email email@example.com.
It’s positive to see that the Minister will “reflect carefully” on calls for an independent review – we must continue the campaign to encourage her to do so.