Britain's 'tourist tax' is driving affluent international visitors away from London to destinations such as France, Italy and Spain, according to Hugh Seaborn, chief executive of Cadogan Estates, one of London's largest landowners.
Seaborn, whose company owns 200 acres of land in Chelsea, including Sloane Street and King's Road, described the tax as an “absolutely self-serving purpose for this country.”
Seaborn highlighted that luxury brands, especially those on Sloane Street, have been significantly affected by the abolition of duty-free shopping, which allowed international shoppers to reclaim 20% VAT on purchases. “We have been very resilient and recovered strongly [from the pandemic] but we have certainly been affected by the tourist tax and we see that particularly with the very luxury brands on Sloane Street, some of which are more dependent on the international visitor,” said Seaborn. He noted that while higher-end stores are doing well, London is losing international visitors to Paris, Milan and Madrid.
The duty-free shopping scheme was scrapped by Rishi Sunak when he was chancellor in 2021, a move estimated by the Office for Budget Responsibility to save the Treasury £2 billion. Despite this, there have been continued calls from retail and hospitality businesses to reintroduce the scheme.
Seaborn (62) argued that the tax's impact extends beyond retail to the broader economy, affecting hotels, restaurants and cultural attractions. “It's not just about shopping; [these visitors] stay in the hotels, go to the restaurants and the theaters and the museums,” he explained. He stressed that the economic ripple effect extends beyond London and benefits regions such as Northamptonshire and Scotland, which are known for their craftsmanship and materials used in luxury goods.
Luxury brands on Cadogan Estates properties, such as Audemars Piguet, Louis Vuitton and Tiffany, have particularly felt the impact. The estate is also home to several five-star hotels and luxury restaurants, all of which benefit from international tourism.
Seaborn noted the ongoing efforts to advocate for the return of tax-free shopping, and acknowledged the challenges facing the government. “There is very strong advocacy in government,” he said, adding that he and others are presenting the economic case for reinstating the plan, even though politicians have “a lot on their plate” at the moment.
The debate over the tourist tax continues, with many arguing that its abolition would increase Britain's appeal to international visitors, thereby benefiting the economy through increased spending in the retail, hospitality and cultural sectors.
