Sunak dampens hopes of reversal over axed UK tourist tax break

LONDON (Reuters) – British Prime Minister Rishi Sunak said nearly all of the benefit of a now-abolished tax break for tourists went to a small area of central London, dampening the hopes of shops and businesses campaigning for it to be brought back.

Prior to 2021, foreign visitors from outside the European Union were able to reclaim sales tax on purchases in Britain, in the same way they still do when shopping across the 27-member bloc.

Businesses such as luxury brand Burberry, high end shops, hotels, restaurants and tailors have complained that international shoppers are now choosing to spend in destinations like Paris and Milan, rather than London.

Sunak told LBC radio he avoided talking about tax policy because of the impact of any comments on markets.

But he said it was worth pointing out that about 97% of the benefit of the tourist tax break went to “a very small area in central London”.

“From a levelling up perspective, it was a very specifically concentrated tax break for people,” he said on Wednesday, in reference to the government’s policy of trying to boost wealth across the regions of the country.

(Reporting by Paul Sandle; Editing by Kate Holton)