Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent estimate he has made of the fiscal impact on economy of the removal of tax-free shopping for overseas visitors in summer 2023.

The Government engaged with varied stakeholders and produced analysis on the cost of the VAT Retail Export Scheme (RES) before withdrawing it. Our analysis, which took increased tourist spending into account, found that introducing worldwide VAT-free shopping would come at a fiscal cost of £2 billion each year.

Furthermore, the OBR’s assessment of the previous VAT RES shopping scheme showed that its withdrawal would have a limited behavioural effect on decisions to visit, or spend, in the UK.

Although there are no plans to re-introduce VAT RES, the Government keeps all taxes under review and welcomes representations to help inform future decisions on tax policy, as part of the tax policy making cycle and Budget process.