Retail Technology Show survey: Half of UK consumers back return to VAT free shopping for tourists
Despite the UK government refusing to overturn the abolition of the duty free shopping for tourists in the Spring Budget, many UK consumers want the scheme to be reinstated, according to research from Retail Technology Show.
A survey of over 1,000 shoppers by RTS, which takes place at London Olympia on 24th and 25th April, revealed that 50% think the government should reinstate VAT- or duty free - shopping for tourists to encourage retail spend by those visiting the UK and support the retail sector.
The VAT Retail Export (VAT RES) scheme, which previously allowed tourists from outside the EU to claim back VAT on goods brought in the UK - effectively making them 20% cheaper - was abolished by the then Chancellor, Rishi Sunak, now Prime Minister, in 2020.
With RTS’s poll showing that 62% of consumers in London, one of the major cities and tourism hubs impacted by the removal of the scheme, would back a return to VAT free shopping for tourists, data from the New West End Company showed that 92% of retail, hospitality and leisure businesses in the capital have been impacted by the loss of VAT RES.
Its data suggests that the impact of removing tax free tourist shopping is increasing the burden on West End businesses alongside with other pressures including the cost-of-living and inflation (both 58%).
While the government did consider a rethink, asking the Office for Budget Responsibility (OBR) to review the policy ahead of the most recent Spring Budget in March this year, Chancellor Jeremy Hunt declined to restore tax free shopping for overseas tourists following the review, prompting backlash from retail businesses and industry bodies.
The Association of International Retail (AIR) estimates that scrapping the duty free shopping for tourists has already cost UK retailers £1.5 billion in spend due to tourists opting to holiday (and shop) in other countries.
Meanwhile Walpole, the industry body that represents the UK’s luxury retail industry, suggests reinstating the VAT relief for holiday shoppers would add £4.1 billion to the UK economy.
Matt Bradley, Event Director at Retail Technology Show, comments: “With retailers already facing challenging trading conditions – from inflationary pressures and consumer demand being weakened by the cost-of-living to disrupted supply chains – this feels like yet another hoop through which they must jump.”
“We know that retail and tourism often go hand-in-hand, with one mutually benefitting the other – and that’s why many of our major tourism hubs, like London and Manchester, often deliver some of the very best examples of retail magic and immersive shopping experiences.”
For the first time, Retail Technology Show will be offering up a London Store Tour, exclusively for brands and retailers attending the event.
Taking place on Tuesday 23rd April, retailers can sign up to join a limited number of tours, allowing them to experience first hand London’s best physical retail.
With a focus on design, technology and experiential activations, the RTS London Store Tours, sponsored by Newstore, will be curated and hosted by retail influencer, Ian Scott.
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