Tourist Tax Diverts Wealthy Visitors from London to Paris and Milan, Claims Cadogan Estates Boss

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The UK’s “tourist tax” is driving affluent international visitors away from London to destinations like France, Italy, and Spain, according to Hugh Seaborn, CEO of Cadogan Estates, one of London’s largest landowners.

Seaborn, whose company owns 90 acres of prime land in Chelsea, including Sloane Street and the King’s Road, described the tax as an “absolute own goal for this country.”

Seaborn highlighted that luxury brands, particularly those on Sloane Street, are significantly affected by the abolition of tax-free shopping, which allowed international shoppers to reclaim 20% VAT on purchases. “We’ve been very resilient and we’ve recovered strongly [from the pandemic] but we’ve definitely been impacted by the tourist tax and we see that particularly with the uber-luxury brands on Sloane Street, some of whom rely more heavily on the international visitor,” Seaborn said. He noted that although upmarket shops are trading well, London is losing international visitors to Paris, Milan, and Madrid.

The tax-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 exchequer £2 billion. Despite this, there have been persistent calls from retail and hospitality groups to reinstate the scheme.

Seaborn, 62, argued that the impact of the tax extends beyond retailers to the wider 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 theatres and the museums,” he explained. He emphasized that the economic ripple effect reaches beyond London, benefiting regions like Northamptonshire and Scotland, 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 also hosts several five-star hotels and high-end restaurants, all of which benefit from international tourism.

Seaborn noted ongoing efforts to advocate for the return of tax-free shopping, acknowledging the challenges faced by the government. “There is some very strong advocacy going on with the government,” he said, adding that he and others are presenting the economic case for reinstating the scheme, even though politicians currently have “a lot on their plate.”

The debate over the tourist tax continues, with many arguing that its removal would bolster the UK’s appeal to international visitors, thereby benefiting the economy through increased spending in retail, hospitality, and cultural sectors.

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