Jeremy Hunt to review tourist tax to boost economy

Jeremy Hunt has laid the groundwork for a reversal of the tourist tax that currently denies overseas visitors the ability to reclaim VAT on shopping.

A review is being undertaken by the Office for Budget Responsibility after pressure from the British Chambers of Commerce director general Shevaun Haviland, Tina McKenzie from the Federation of Small Businesses and Heathrow Airport chief executive Thomas Woldbye.

Writing in The Times, they said: "Almost overnight, tourists saw prices hiked by 20% compared to this country's closest European neighbours, delivering a blow to British businesses at a time when many were struggling to survive.

"The reality is every sale diverted from British tills to the European continent puts at risk the wages and livelihoods of thousands reliant on retail and the domestic side of its supply chain. Hotels, restaurants and attractions right across the UK all benefit from getting tourists through the door."

The pressure follows a study commissioned by the Daily Mail and Sir Rocco Forte, owner of Rocco Forte Hotels, which found that reinstating VAT rebates could fuel the creation of new jobs and provide an extra £2b for treasury coffers.