Recommendation 8

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.