Kemi Badenoch has promised to scrap the unpopular tourist tax as part of a Conservative plan to reignite Britain’s struggling economy.
The Tory leader said tax-free shopping would be restored for international visitors, a move she said could attract millions of tourists and inject £4billion into Britain’s high streets.
Her pledge represents a major success for the Daily Mail’s ‘Scrap the Tourist Tax’ campaign. Mrs Badenoch confirmed that a Conservative government would reinstate VAT-free shopping for overseas visitors, after the scheme was abolished in 2021.
The commitment creates a sharp contrast with Labour, as the Government’s tax burden reaches its highest level since the Second World War and further increases are expected to be considered at the upcoming Budget.
Mrs Badenoch has also promised to abolish stamp duty, overturn the Family Farm Tax and examine options for scrapping inheritance tax. Labour, meanwhile, has introduced a levy on overnight stays, while ministers appear to be preparing the ground for additional tax rises next month.
The Conservative leader accused Andy Burnham of tolerating Britain’s ongoing decline under Labour. “I am tired of the doom and gloom that says Britain has to accept decline, tax people more and expect less,” Mrs Badenoch told the Daily Mail.
“We should be ambitious about what this country can achieve. Britain has world-famous retailers, creative designers, outstanding manufacturers and some of the finest places anywhere to eat, sleep and visit.
“Five years of effectively directing shoppers towards Paris and Milan is long enough. I am grateful to the Daily Mail for its important campaign to end this deeply unpopular tourist tax.”
Tory leader Kemi Badenoch pledged to restore VAT-free shopping for international visitors, following its abolition in 2021
Mrs Badenoch accused Prime Minister Andy Burnham of accepting Britain’s continued decline under Labour
She added: “This policy has damaged tourism and the high street. Britain should be a magnet for visitors ready to spend, not a country that encourages them to take their money elsewhere.”
More than 500 business leaders have backed the Mail’s campaign to restore the 20 per cent refund scheme, which supporters say would encourage tourism in line with arrangements available across much of Europe and in several US states.
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Leading companies including Giorgio Armani, Pernod Ricard and the owner of Westfield’s shopping centres argue that the cost of issuing refunds would be more than offset by the wider economic gains from attracting additional visitors.
Under the proposed Conservative policy, VAT refunds would initially return for qualifying visitors from outside the EU. The scheme operated before 2021, when it was scrapped by the previous Conservative government.
If evidence shows the policy generates more economic value than it costs, the party said it would extend the arrangement to EU visitors by the end of the next Parliament. That could open the door to a potential market of hundreds of millions of shoppers.
The Conservatives cited Centre for Economics and Business Research analysis suggesting that the return of tax-free shopping could bring as many as 2.35million extra visitors to the UK and generate an additional £4.1billion in spending.
The party said the benefits would extend beyond retail, helping hotels, restaurants, transport providers and the wider tourism sector while preventing billions of pounds from being spent in competing European destinations.
The announcement comes after Labour this month introduced a ‘holiday tax’ across mayoral authorities under its control. Critics say the extra charge will increase the cost of family breaks and encourage more people to holiday abroad rather than in Britain.
Business leaders, including executives from Fortnum & Mason, Paul Smith and the company behind Claridge’s hotel, welcomed Mrs Badenoch’s proposal as both “pro-growth” and “pro-jobs”.
Sir Rocco Forte, chairman of Rocco Forte Hotels, said the policy was “crying out to be reversed”, adding that Britain is the only major shopping destination in Europe that does not offer international visitors a tax refund.
Helen Dickinson, chief executive at the British Retail Consortium, said of a tax-free shopping scheme: ‘Done properly, it would boost economic growth and deliver a net benefit to the Exchequer.’
Even Labour Mayor of London Lord Khan has called on the Government to restore tax-free shopping, saying the decision to scrap it was ‘a huge mistake’.
A Labour spokesman said: ‘The Tories have pulled off a spectacular U-turn. If they think it’s such a great idea, they should explain why they scrapped it and how they’d pay for bringing it back.’