According to New West End Company, the negative impact of the tourist tax on the West End has exceeded the effects of the cost-of-living crisis. The London-focused organization’s data revealed that the loss of tax-free shopping has had a detrimental effect on the majority of businesses in the district. A survey conducted among retail, hospitality, leisure, and dining businesses in the area found that 92% have been affected by the absence of the VAT Retail Export Scheme, which allowed non-EU tourists to claim back their VAT at the airport.
The impact of the loss of tax-free shopping was found to be significantly higher compared to other pressures such as the cost-of-living crisis or inflation, which affected 58% of the respondents. Disturbingly, 54% of the companies surveyed confirmed that they were reviewing their future investment strategies in the UK, with 21% considering UK closures or reallocating capital to other countries. Furthermore, 48% of businesses were reconsidering their staffing requirements in order to manage costs.
The absence of tax-free shopping has also led to a decline in overall visitor numbers for 72% of the businesses affected, while 89% reported lower spending by international visitors. Additionally, 42% of the companies stated that the average transaction value had decreased.
The research conducted by New West End Company supports recent forecasts from the Centre for Economics and Business Research, which suggest that reinstating the VAT Retail Export Scheme could contribute up to an additional £10 billion per year to the British economy and encourage investment in the UK.
Dee Corsi, the chief executive of NWEC, highlighted the potential advantages of reinstating the scheme, including its extension to EU residents. Corsi emphasized that reintroducing tax-free shopping could have a positive effect on government tax revenues and provide a much-needed boost to the economy. It would also position the West End as the only major European shopping destination where 450 million European residents could shop tax-free, potentially opening up a new tourism market.
To learn more about the impact of the tourist tax on the West End, you can visit the New West End Company’s website here. Additionally, for information on the VAT Retail Export Scheme and its potential economic benefits, you can visit the Centre for Economics and Business Research’s website here.
