New Chancellor of the Exchequer Jeremy Hunt's announcement to scrap plans to allow foreign tourists to reclaim value-added tax (VAT)* has shocked London's luxury emporiums.
*Flat tax charged on an item
Hunt is said to have tightened fiscal policy after Prime Minister Liz Truss and former chancellor Kwasi Kwarteng acted to make public borrowing higher.
This follows because Kwarteng believes that the VAT-free shopping program will allow tourists to recover the 20% tax payment after they return to their home country.
However, he was immediately fired last week after many investors worried about the consequences of making the tax cuts unfunded.
According to Helen Brocklebank, the Chief Executive Officer at Walpole expressed his disappointment that the government refused to continue the policy that allowed retail sales to generate a profit of £1.2 billion (RM6.39 billion).
As such, Brocklebank and the new chancellor will review the benefits of buying VAT-free goods as they are likely to boost the ecosystem and support jobs across the country.
Meanwhile, leading boutiques in the cities of Paris, Madrid and Milan are more popular with tourists, earning a profit of £5 million a week as the wealthy are more interested in shopping in those cities than in London due to VAT charges.
It is understood that the UK is one of the European countries that does not implement tax-free shopping in order to encourage more tourists to come to the country.
Meanwhile, the BRC's director of business and regulation, Tom Ironside stressed that the implementation of the policy could help strengthen the UK's position as a leading destination for international buyers.
