The 'tourist tax' could still be scrapped in Jeremy Hunt's budget next week amid a review by the OBR, campaigners say

The Tourist Tax could still be scrapped in this year’s Budget, campaigners have said.

The Office for Budget Responsibility (OBR) is reviewing the costs and benefits of a U-turn on the tax after business leaders met with Treasury officials this month.

Hopes for a reversal had receded after a Treasury minister said tax-free shopping ‘could subsidise a large amount of tourist spending that already occurs without a tax relief in place’.

Nigel Huddleston wrote that any new scheme ‘would take time to legislate for and implement’, in response to a letter arguing the UK would miss the opportunity to cash in on the Paris Olympics.

But in his reply to Sacha Zackariya, who runs a currency exchange firm ChangeGroup, Mr Huddleston added: ‘All taxes are kept under review and the Government is grateful for industry submissions on this matter to help inform its policy.’

the 'tourist tax' could still be scrapped in jeremy hunt's budget next week amid a review by the obr, campaigners say

Trade minister Nigel Huddleston wrote that any new scheme ‘would take time to legislate for and implement’

the 'tourist tax' could still be scrapped in jeremy hunt's budget next week amid a review by the obr, campaigners say

Paul Barnes, the chief executive of the Association for International Retail which represents Heathrow Airport (pictured), said there was ‘no reason’ why the Chancellor should not reintroduce tax-free shopping

And businesses said last night they were confident the OBR would conclude that the broader benefits of the policy would far outweigh the cost to the Exchequer.

They argue a revived scheme would be a ‘Brexit boost’ as for the first time it would now be available to EU tourists visiting the UK.

Last night Paul Barnes, the chief executive of the Association for International Retail, said: ‘If the OBR rejects The Treasury’s £2.5bn price tag and shows a net gain to the Treasury, then there is no reason why the Chancellor should not reintroduce tax-free shopping in the Budget.’

His group, which represents Heathrow Airport and Bicester Village among others, has submitted evidence to the OBR which shows EU residents would contribute £1bn more in VAT due to extra spending on hotels and restaurants.

Dee Corsi, chief executive of the New West End Company, added: ‘Like many, we are now waiting for the findings of the OBR’s assessment and hope that the Chancellor’s decision on 6 March reflects the reality of the shop floor.’

the 'tourist tax' could still be scrapped in jeremy hunt's budget next week amid a review by the obr, campaigners say

In 2020, Rishi Sunak – chancellor at the time – abolished rules which allowed tourists from outside the EU to claim back VAT on purchases – instantly making them 20 per cent more expensive. Pictured: At the Siemens Mobility factory in Yorkshire on Monday

the 'tourist tax' could still be scrapped in jeremy hunt's budget next week amid a review by the obr, campaigners say

More than 400 firms, including Marks & Spencer (pictured), Burberry, Jimmy Choo and Harrods, have backed the Mail’s campaign to reverse the outside the EU tourist VAT refund

READ MORE: London Fashion Week chiefs pile pressure on Jeremy Hunt to scrap the hated tourist tax in the next Budget 

In 2020, Rishi Sunak – chancellor at the time – abolished rules which allowed tourists from outside the EU to claim back VAT on purchases – instantly making them 20 per cent more expensive.

Ministers argue that reinstating the VAT refund would cost around £2billion a year in lost revenue.

However critics claim the figure fails to take into account the huge amount that tourists spend on hotels, shops, restaurants and theatre trips.

More than 400 firms, including Marks & Spencer, Burberry, Jimmy Choo and Harrods, have backed the Mail’s campaign to reverse the decision.

The heads of the Association for International Retail, the New West End Company and the British Fashion Council are among those to have met with ministers in the last few weeks to share their figures.

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