High-tax Britain ‘is driving away tourists'
Tourists are increasingly avoiding Britain because of high taxes and travel fees imposed by Rachel Reeves, an industry chief has warned.
Julia Simpson, the chief executive of the World Travel and Tourism Council, said an increase in air passenger duty (APD), new visa fees, high VAT and the National Insurance raid on employers were undermining the sector, which contributes 10pc of GDP.
Chinese and Indian tourists are 'massively on the move' and will drive the industry in coming decades, but are being put off visiting the UK because of the so-called tourist tax, she added.
Ms Simpson, who is a former British Airways executive, said: 'The UK is absolutely taking travel and tourism for granted. The Treasury is imposing layer upon layer of taxes on a sector that is bringing money into the UK and is not at all a burden.
'We're definitely going to miss out. It's not just about money, it's about sending a signal that the UK is really a great place to visit and that they welcome visitors.
'If the Chancellor is looking for growth, and growth that isn't in the public sector and is outside London, you've got to sell the UK.'
Ms Reeves retained increases in APD – a tax unique to Britain – imposed by the Conservatives while announcing a further escalation that will apply from next year, lifting the duty to as much as £253 per person.
That is on top of airport fees at Heathrow that rank as the world's most expensive. They are charged to airlines and passed on to customers while being regulated by the Government.
Ms Simpson also questioned the wisdom of including Americans in the electronic travel authorisation (ETA) visa scheme, introduced to strengthen border security, the charge for which was raised to £16 last month.
She said: 'Americans bring their dollars into the UK and love coming here. You've got to be smart. Just because someone puts something on you doesn't mean you've got to reciprocate.'
Ms Simpson said the tourist tax, a decision to scrap tax-free shopping for international visitors taken by Rishi Sunak when he was chancellor, is proving a serious drag on visitor numbers from some countries.
The Treasury has claimed that scrapping the exemption, which exposes visitors to a 20pc VAT rate that is itself higher than in most countries with which Britain competes for tourists, would cost £2bn.
But campaigners have argued it may be losing the exchequer £11bn annually as it deters 2m tourists from visiting, according to research from the Centre for Economics and Business Research.
Ms Simpson, who spoke at a tourism event in New Delhi, India, said the joint industry-government Visitor Economy Advisory Council, on which she sits, is making the case to the Treasury for a rethink.
She said that Chinese tourists in particular will choose travel destinations based on shopping opportunities and that 'tax-free shopping is a big, big draw'.
She said: 'I really hope they will bring it back. If it is so bad, why does France, which receives more visitors than anywhere else in the world, have tax-free shopping? Why does Italy?'
Ms Simpson accused the Treasury of using narrow definitions when assessing the benefits and costs of the situation, adding: 'I'm very sorry to say, but the UK Government is currently being run by Treasury officials instead of politicians who we've elected.'
A cut of about 50pc in funding for Visit Britain, the national tourism agency, will compound the situation, she said.
Ms Simpson warned that the Government is putting up barriers to foreign visitors at a time when domestic tourism is struggling to recover to pre-Covid levels.
She said that boycotts of the US by Canadians and Mexicans amid Donald Trump's trade wars are likely to see China overtake America as the world's biggest tourism market earlier than expected.
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