Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will commission a review by the Office for Budget Responsibility into the impact of tax free shopping at (a) airports and (b) ports on the economy.

In October 2022, to ensure the UK’s economic stability and to provide confidence in the Government’s commitment to fiscal discipline, the Chancellor announced that the Government will not be proceeding with plans to introduce a new VAT-free shopping scheme. Such a scheme would come at a significant fiscal cost as it would subsidise a large amount of tourist spending which already occurs without a tax relief in place.

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 withdrawal would raise a significant amount of revenue and have a limited behavioural effect on decisions to visit, or spend, in the UK. Although the Government keeps all taxes under review and continues to consider all available evidence as part of the policy-making process, there are no current plans to commission a further assessment.