…By Henry George for TDPel Media.
Prominent figures in London’s cultural sector are joining the chorus of critics condemning the government’s decision to deny foreign tourists VAT-free shopping.
They argue that the absence of this tax benefit, known as the “tourist tax,” is negatively impacting attendance at theaters and other venues, causing a significant loss of income during a challenging period.
Elimination of VAT-Free Shopping:
The option of tax-free shopping for foreign visitors, which previously allowed them to save 20% on eligible spending, was abolished by former Chancellor Rishi Sunak at the beginning of 2021 when Brexit took effect.
The Treasury has justified this decision by stating that the perk primarily benefited central London and was not a significant draw for overseas visitors.
The Impact on London’s Cultural Sector:
Sonia Friedman, a highly influential producer in the West End, expressed her concerns about the impact of the decision.
She emphasized that Theatreland and the wider central London economy cannot solely rely on domestic visitors, particularly during the summer months.
She argued that any factors deterring travel to the UK at a time when the entire theater industry is still recovering are counterproductive.
Reimposing VAT on international visitors essentially introduces a tourist tax at the worst possible moment.
Encouraging tourists to return to London is crucial for the revitalization of the theater sector and the overall success of businesses in the West End and beyond.
Concerns of Other Cultural Institutions:
Alex Beard, CEO of the Royal Opera House, supported Friedman’s warning, stating that the current situation acts as a disincentive for overseas visitors to extend their stays in London and beyond.
He cited evidence that cities like Milan, Madrid, Berlin, and Paris are benefiting from this tax benefit, while London is falling behind its European competitors, which directly impacts the potential overseas tourist market for the UK performing arts sector.
Neil Constable, CEO of Shakespeare’s Globe, emphasized the challenging environment created by the pandemic and its direct effect on income streams.
He highlighted the missing percentage of tourist spend, which previously played a crucial role in supporting the venue.
Calls for Government Action:
Ros Morgan, head of the Heart of London Business Alliance, representing traders in the West End entertainment district, also called for a review of the data and reinstatement of tax-free shopping.
She argued that the government should consider incentivizing overseas visitors to choose the UK as a destination, thus contributing to economic growth.
Conclusion:
The government’s refusal to restore VAT-free shopping for foreign tourists is receiving strong criticism from leading figures in London’s cultural sector.
They argue that the absence of this tax benefit is causing financial losses and deterring international visitors at a critical time for the industry’s recovery.
Restoring this perk would not only support the theater sector but also stimulate economic growth in the wider West End area.
A review of the data and a reconsideration of the government’s stance are urged to ensure the long-term success of London’s cultural institutions.