Source · Select Committees · Culture, Media and Sport Committee
Recommendation 6
6
Acknowledged
Paragraph: 38
We find it astonishing that the Minister and the Treasury were unable to tell us...
Conclusion
We find it astonishing that the Minister and the Treasury were unable to tell us what assessment was made of the impact on the number of tourists coming here, not just in terms of raw visitor numbers but also the indirect benefits of their staying here. We are led to conclude that either the Treasury did not consider this or, if they did, gave little weight to DCMS’s warnings of its potential devastating impact on the industry. The Government fixed on its policy without ensuring it had the full facts before doing so. To make such a decision without considering its indirect impact, not just the direct one, is extraordinary and has already harmed the industry on which so much of our economy depends.
Government Response Summary
The government says it consulted widely on the change and assessed evidence, balancing fiscal and economic impacts. DCMS will consider the impact of future decisions affecting the inbound tourism sector, noting both direct and indirect consequences of a policy.
Paragraph Reference:
38
Government Response
Acknowledged
HM Government
Acknowledged
The independent Office for Budget Responsibility published their assessment of the withdrawal of the previous VAT-free shopping schemes in November 2020. This showed that the withdrawal of VAT-free shopping would raise a significant amount of revenue and have a limited behavioural effect on decisions to visit, or spend, in the UK. The Government consulted widely on this change and specifically asked for evidence on the impacts of withdrawing the schemes. This evidence was assessed alongside the fiscal and economic impacts and balanced against the policy objectives in this area. The withdrawal of the VAT Retail Export Scheme was also part of a wider package of changes, with significant benefits for UK consumers - the reintroduction of duty-free sales for EU bound passengers and the quadrupling of inbound allowances for alcohol. Nevertheless, the Government keeps all taxes under review and considers all available evidence as part of the tax policy making cycle. DCMS will endeavour to consider the impact of future decisions affecting the inbound tourism sector, noting both direct and indirect consequences of a policy. This will be helped by ensuring that DCMS remains well connected with industry to attain a thorough understanding of the sector’s progress. Particularly, the Tourism Industry Council working groups represent regular partnership between industry and government, and present an opportunity for DCMS to establish learnings from key intelligence and insights for future policy making.