Heathrow chief: Scrapping London tourist tax is ‘critical for the UK’
Bringing back VAT-free shopping for international visitors by scrapping the so-called ‘tourist’ would be “critical for the UK,” London Heathrow Airport’s chief executive has said.
“We know the numbers,” Thomas Woldbye told Morning Wire in an interview. “For the UK economy, it’s a few billion pounds. I think it’s just a pity missing that, when there’s no real cost to it.”
The ‘tourist tax’ was initiated under then-chancellor Rishi Sunak in 2021.
Retail businesses and a host of airports have since pleaded for the government to reinstate the tax break, with wealthy international shoppers choosing to splash their cash elsewhere.
The controversial levy is again in focus ahead of the key Spring Budget. Recent analysis from the Centre for Economics and Business Research in January revealed nearly £11.1bn had been wiped off UK GDP.
“It’s a missed opportunity, in my view,” Woldbye explained.
“It’s about attracting tourists here that see this as an important part of their business, or their journey. And if it’s not here, it’s somewhere else.”
The government is mooting over whether to reinstate the policy amid growing pressure from business lobby groups, including a letter signed by a slew of FTSE 100 bosses in late January, which described the tourist tax as an “own goal” for the British economy.
Bringing the tax break back was debated in parliament late last year and Jeremy Hunt pledged in the Autumn Statement to review the numbers, but no legislation has since been put in place for its return.
“I think there’s no reason to delay… Let’s get it back and moving because it is an immediate benefit for the country,” Woldbye said.
Last August, data from London’s New West End Company revealed that tourists visiting Oxford Street from the US and Gulf had slashed spending by one and 17 per cent respectively in the last three months, despite a jump in flights from those regions to the capital.
Woldbye, who was the former head of Copenhagen Airport, began his tenure at Heathrow in October. The Hounslow hub today returned to profit for the first time since the pandemic, marking a major milestone in its post-Covid recovery.
An HM Treasury spokesperson said: “The number of international visitors coming to the UK is almost back to pre-pandemic levels, and to support our high streets we have slashed their business rates bills by 75 per cent and effectively cut their corporate tax by £55 billion if they invest.
“The OBR is reviewing the wider economic effects of removing tax-free in-store shopping for tourists, and we will consider their findings within the context of the wider public finances once they have been published.”