Tourist Spending: VAT

Lord Forsyth of Drumlean Excerpts

Wednesday 24th May 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, I reassure the noble Baroness that the Government continue to monitor the evidence around VAT shopping, as we do keep all taxes under review. As to the process the Government went through in making their decision, I reassure the noble Baroness that we engaged with a wide variety of stakeholders on the removal of the VAT scheme, including Border Force, retailers, VAT refund providers, refund agents, airport operators and shoppers. That research took place in parallel with a consultation which produced a range of views. So the Government did make every effort to look at the evidence available when reaching this decision, including their analysis of the costs of the policy.

[Lord Forsyth of Drumlean (Con)]

My Lords, would my noble friend welcome the conversion of the Liberal Democrats to the idea that cutting taxes results in more revenue? Could she explain to them that, at the moment, we need that revenue because of the level of borrowing the Government have?

[Baroness Penn (Con)]

I absolutely agree with my noble friend that levels of government borrowing are high because of the impact of both the Covid pandemic and the war in Ukraine. One of the reasons that levels of debt are high is that we have provided strong support to sectors such as tourism during the difficult years of Covid, and we are also providing strong support to them to recover from the pandemic and build back visitor numbers.