The government is under growing pressure to scrap the so-called tourist tax, after the boss of Battersea Power Station added his voice to industry calls to remove the luxury shopping levy.
Simon Murphy, who runs the Battersea Power Station Development Company, told The Daily Telegraph that the UK was “shooting itself in the foot” by not axing the tax.
He warned the decision to ditch VAT-free shopping for overseas visitors two years ago had damaged London’s reputation for business and made it less competitive compared to European rivals.
“The UK cannot be complacent about our international appeal in this increasingly competitive world and we do risk shooting ourselves in the foot by not acting,” Murphy said.
The property boss argued that reintroducing tax free shopping for tourists would incentivise more people visiting the UK.
This would “benefit not only retail, but the wealth of businesses that rely on the tourism trade”.
Murphy is the latest in a line of senior business figures to urge Prime Minister Rishi Sunak to shelve the policy first brought in when he was Chancellor.
Battersea Power Station was reopened last October after Malaysian investors spent billions redeveloping the area into flats and a new luxury shopping destination.
Last month, Harrods chief executive Michael Ward revealed the premier retailer had swapped luxury handbags with cheaper products – while the chief executives of Burberry, Mulberry and Harvey Nichols have also all complained about the policy’s impact on sales.
Tax-free shopping still applies in EU countries – contributing to surging spending in France and Italy by US and Middle East tourists.
By contrast, spending levels have barely recovered to pre-pandemic norms in the UK.
The government has been approached for comment.