Copyright standard
Rachel Reeves is being urged by London business chiefs to scrap the “tourist tax” to boost London as she champions economic growth as her number one priority. The failure to reinstate VAT-free shopping for foreign visitors, axed by then Chancellor Rishi Sunak in 2021, is said to be costing the West End hundreds of millions of pounds a year as tourists head to Paris, Milan and other cities which offer this tax break, rather than to London. Universities in the capital are also facing hefty blows from a proposed six per cent levy on overseas student tuition fees, with many of them relying on foreign students for their finances. The London bosses stressed that foreign students who come to study in the city generate £10 billion for the UK through expenditure and tuition fees. In a letter to the Chancellor, ahead of the Budget on November 26, London business group BusinessLDN outlined a series of reforms which they believe could help the capital to drive economic growth. “Following extensive engagement with senior business leaders over the summer, BusinessLDN has identified a window of opportunity for London to win a higher share of global capital, against a backdrop of significant geopolitical and macroeconomic volatility,” the organisation’s chief executive John Dickie stressed. “Seizing this opportunity requires removing the roadblocks holding us back.” He added “Having done much of the heavy lifting 12 months ago, business must not be asked to shoulder the burden of any further tax rises, which would hit both investment and confidence. “Instead, the Government should prioritise creating the fiscal headroom to invest in removing barriers to growth, such as dropping the Higher Education Levy, cutting stamp duty on shares and removing the sales tax on overseas visitors which are hitting our tourist trade.” Ms Reeves has already signalled that millions of households face tax rises as she vowed not to increase levies that would hit economic growth. BusinessLDN also urged the Chancellor to back several major London transport projects including by: * Committing funding to deliver, in partnership with the private sector, the Docklands Light Railway extension to Thamesmead. The business chiefs stressed this could unlock up to 25,000 new homes, support up to 10,000 new jobs and add £15.6 billion to the economy. * Providing political backing and “sufficient” funding to build momentum behind the Bakerloo Line upgrade and extension for the Tube, which reportedly will support an estimated 107,000 new homes and 150,000 jobs along the whole route. * Issuing a formal statement of intent to explore delivery of the West London Orbital which BusinessLDN said will support up to 15,800 new homes in West London and act as catalyst for economic development. The Chancellor faces a series of fraught decision on tax and spend, partly as she is set to be dealt a blow by changes to UK productivity forecasts which are expected to leave her with a £20 billion shortfall to fill. Sir Keir Starmer has stood by Ms Reeves during the political storm over her failing to get a licence to rent out her home in Southwark, London, while she lives in Downing Street. But she will face growing pressure if she fails to deliver economic growth to boost public services. London is braced to be hard hit by some of her tax rises. Options include a mansion tax, a higher band of council tax, 1p or 2p more on income tax, freezing the thresholds for paying the basic and higher rates of income tax for more years, a new levy on accountants and lawyers who use limited liability partnerships, meaning they are treated as self-employed, cutting relief on pension contributions, or higher levies on shares.
