Tax-Free Shopping: Economic Impact
Debate between Lord Pitt-Watson and Baroness Meyer(1 week, 3 days ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Meyer
To ask His Majesty’s Government what assessment they have made of the impact of tax-free shopping on the economy.
The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)
My Lords, the VAT retail export scheme known as tax-free shopping was withdrawn in 2021. The announcement of that withdrawal was made by Kemi Badenoch. The OBR estimated that the 2021 withdrawal, which was from non-EU citizens, would save the taxpayer £540 million. However, a policy that was compliant with World Trade Organization rules would apply to EU citizens as well and be much more expensive. It therefore seems extraordinary that Mrs Badenoch has confirmed that she would reintroduce this policy but has not told us how it would be funded. Should any Member of the party opposite know the answer to that question, I would be most interested.
Baroness Meyer (Con)
I thank the Minister for his Answer. I should note that it was actually Rishi Sunak who scrapped the scheme. The OBR estimate of £500 million a year is not agreed by many of the organisations and businesses that would benefit from it. Will the Minister review the evidence, since many do not agree with the numbers, and consider a digital retail export scheme modelled on Germany and Italy, in which private operators refund and thus reduce administration costs to the Government? That was one reason why the scheme was scrapped, because the Government estimated that it was too expensive bureaucratically. Before the noble Lord, Lord Watts, says anything—yes, it was the Conservative Party that scrapped the scheme, but, on the other hand, I think to myself, “Isn’t this an irresistible opportunity for the Labour Government to reverse something to create jobs and growth in this country?”
Lord Pitt-Watson (Lab)
I thank the noble Baroness, Lady Meyer. In fact, the Conservative Party did reintroduce this scheme in the Liz Truss mini-Budget. It was withdrawn six weeks later by Jeremy Hunt when he became Chancellor and, when he withdrew it, he suggested that that would save the taxpayer £2 billion per year. Again, I ask if anyone on the Benches opposite can tell me where that £2 billion would come from? As to the evidence that this would be tax raising, there are some reports—I accept that point from the noble Baroness—but the Oxford Economics report was, of course, commissioned by the Association of International Retail and the Centre for Economics and Business research by Global Blue, which is a company that provides VAT refund services. If we are going to have evidence-based policy, I think the numbers that I have been citing to your Lordships are rather better than ones that might be in danger of being policy-based evidence.
United Kingdom: Business Competitiveness
Debate between Lord Pitt-Watson and Baroness Meyer(2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Meyer
To ask His Majesty’s Government what assessment they have made of the cumulative impact of tax measures introduced since July 2024 on the competitiveness of the United Kingdom as a place to do business.
The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)
My Lords, it is an honour to be answering this Question from the Dispatch Box. British business is competitive. It creates jobs, it produces the goods and services on which we depend, and it pays tax that funds public services. Those services in turn support business, and paying for them fully generates fiscal stability. Those services and that discipline in turn underpin business competitiveness. It seems to me that, through the system, we should be thanking businesses for the huge burden they bear and for the amount they generate for our economy and society.
Baroness Meyer (Con)
My Lords, I welcome the Minister to his new position. I thank him for his Answer, but I am a little surprised by his optimism. Since the changes to capital gains tax and higher employment costs, 6,000 business owners and company directors have left the country, some 13,000 stores and 700 pubs have closed, and 7,000 hotels, restaurants and cafés have entered insolvency. The warnings are coming from everywhere: the Institute of Directors, the CBI, the IEA, the British Retail Consortium, the hospitality sector and major retailers all point to the burden of higher taxes. We cannot tax our way to growth. Does the Minister not agree that to get growth, we need more entrepreneurs and risk-takers, not policies that drive them abroad?
Lord Pitt-Watson (Lab)
I absolutely do think that we should be backing business. I hope there is some assurance in the first speech that the Chancellor of the Exchequer made when he said that he was just as concerned about the cost of doing business as he was about the cost of living. This Government have done lots of things to generate competitiveness. One is fiscal credibility. Another is the trade deals. A third would be the industrial policy. Perhaps we are beginning to see in the things that businesspeople are saying that although there is some bad news—there is always some bad news—there is also good news. For example, earlier this year 46% of members of the British Chambers of Commerce expected to grow this year, relative to 35% last year. I could quote many business organisations and individuals who are essentially saying that Britain is on the up and a great place to invest.