A leading royal jeweller has reduced prices by 20% to mitigate the impact of the ‘tourist tax’.
- The 20% discount was offered to American and Australian tourists, aiming to counteract the 2020 removal of VAT-free shopping by the UK government.
- This tax policy change has led to a notable decline in tourist spending within the UK, with shifts towards other European countries like France and Spain.
- The jeweller highlights the significant role of luxury shopping in boosting tourism and the wider economy, calling for a reevaluation of current policies.
- Emphasising the importance of supporting small to medium enterprises, the jeweller urges political leaders to foster an entrepreneurial environment.
The removal of VAT-free shopping for tourists in 2020, implemented by then-Chancellor Rishi Sunak, prompted a strategic response from a prominent royal jeweller. Recognising the adverse effects on her second-largest market, American tourists, she implemented a 20% discount for American and Australian visitors over the summer. The initiative aimed to draw international customers back to her London boutique located in Sloane Square.
The jeweller observed a tangible increase in foreign customer visits following the price cut, noting, “It’s amazing how many people were then brought back [with the discount].” This price adjustment was crucial in reversing a trend that saw significant tourist spending shift to countries like France and Spain due to the loss of the VAT-free advantage.
Critically, the jeweller argues that luxury shopping is a pivotal attraction for tourists, contributing to the UK’s broader economic health. Despite government predictions that removing tax-free shopping would save £540 million over two years, she believes the policy should be reevaluated for its economic impact. The jeweller emphasises that tourism encompasses more than just luxury goods but also the overall spending experience that benefits sectors like hospitality and tourism.
Additionally, the jeweller expressed concern over the government’s current economic strategies, which she feels disproportionately favour large enterprises over smaller businesses. She advocates for reduced bureaucratic hurdles and greater support for young entrepreneurs, stressing the need to cultivate a business-friendly environment that encourages innovative ventures and risk-taking.
A representative from the Treasury acknowledged the fiscal challenges the government faces, notably a £22 billion budgetary gap left by the predecessor. The representative highlighted the government’s position on making difficult decisions in the upcoming budget.
The jeweller’s strategic discount highlights the broader discussion about the economic implications of the tourist tax policy.
