PARLIAMENTARY DEBATE
VAT Exemption for International Visitors - 7 May 2024 (Commons/Commons Chamber)

As stated in the spring Budget, the Government are considering the findings of the review by the Office for Budget Responsibility of VAT-free shopping, alongside industry representations and broader data. We continue to welcome further submissions and representations in response to those findings.

Data from Heathrow, the United Kingdom’s largest and busiest airport, shows that despite a near-full recovery in passenger volumes post lockdown, retail spend on affected goods is 32% below pre-pandemic levels. That figure is shocking. Heathrow airport joins hundreds of businesses in calling on the Government to reintroduce VAT-free shopping for tourists, or similar incentives. Will the Minister acknowledge the figures, listen to the industry and reinstate that popular policy, as British businesses are demanding?

My hon. Friend will be pleased to know that I will not only listen to the industry, but I met Heathrow just last week to hear its representations. The challenge is the way that modelling, and forecast and behavioural changes can be confidently assessed. Government estimates suggest that a worldwide scheme could cost as much as £2.5 billion. The challenge is the so-called deadweight cost that could happen by subsidising spending that otherwise would exist anyway, versus the incremental benefit that we could get from new visitors coming to the UK. Of course that is a behavioural change based on a tax change. It is based on a variety of assumptions, and therefore the modelling and assumptions underlying it vary, but I am listening to all representations.