Dame Priti Patel has asked Chancellor Jeremy Hunt to scrap the tourism tax and reintroduce VAT-free shopping for tourists ahead of Wednesday’s Budget.

The former home-secretary and the Conservative Party Member for Witham said the move would “give businesses a real boost”, saying the current tax on tourism is making Britain less attractive for tourists.

Writing in the Telegraph, Dame Priti said: “Our country now needs more pro-business measures to secure future growth and with the Budget approaching the Chancellor must consider scrapping the tourism tax and reintroducing VAT-free shopping for foreign visitors.

“Our competitors in Europe have already taken advantage, with France experiencing record levels of tourism spend in 2022 and 2023 as they attract high-spending tourists.

Jeremy Hunt
Chancellor Jeremy Hunt (Maja Smiejkowska, PA)

“High-spenders and tourists from the USA, Canada, the Middle East and China are now finding Paris and other European cities a more attractive destination than London and the UK.”

Mrs Patel said data from Visit Britain showed that there was a 10% decline in spending from tourists in 2023, compared to the levels four years earlier.

“Unless tax-free shopping is reintroduced, British businesses and brands will continue to lose out to their European competitors, where tax-free shopping continues,” Dame Priti added.

It comes as Mr Hunt is set to announce funding ahead of the Budget aimed at helping to make the UK “a world leader in manufacturing”.

The package, said to be worth £360 million, is for research and development (R&D) and manufacturing projects across the life sciences, automotive and aerospace sectors.

It includes £92 million joint Government and industry investment to expand facilities to make life-saving medicines and diagnostics products.

In response shadow business secretary Jonathan Reynolds said the Government is “incapable of providing the long-term stability manufacturing needs to thrive”.

He added: “Recycled announcements won’t be enough to turn around the lowest business investment in the G7.”