Tax-free Shopping

Lord Hannan of Kingsclere Excerpts

Thursday 15th December 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

We do not have any plans to analyse this further. As I have said before, fewer than one in 10 non-EU visitors used the previous VAT-free shopping scheme, indicating that it is really not a pull factor for tourists. Canada and New Zealand also do not offer this type of tax-free shopping on the high street, and the USA does not have a countrywide system, yet all these countries are popular tourist destinations.

[Lord Hannan of Kingsclere (Con)]

My Lords, the Treasury has a long history of downplaying the secondary effects of tax reductions. It has done it on corporation tax and the IR35. Oxford Economics tells us that 1.6 million visitors are attracted by VAT-free shopping. All those queues of people from China outside Harvey Nicks, Bicester Village and so on are bringing much- needed revenue to our economy. Will my noble friend the Minister ask his friends in the Treasury to reconsider the dynamic effects of this and other tax cuts?

[Viscount Younger of Leckie (Con)]

We have no plans to reconsider this. I know that about 80% of the effect of this is on retailers—for whom I have some sympathy, I should say—in London, and 10% in Bicester Village. It is very much focused on those areas and we do not have any plans to rethink it.