Kiki McDonough, the jeweller favoured by Princess Diana, Kate Middleton, and Queen Camilla, has slashed prices by 20% in a bid to offset the effects of the so-called “tourist tax”.
This summer, McDonough provided a discount to shoppers from America and Australia. The goal was to mitigate the effects of the 2020 termination of VAT-free shopping for tourists, a policy implemented by the former Chancellor, Rishi Sunak.
The luxury industry has openly expressed concerns about the harmful effects of the policy. McDonough observed a notable decrease in American tourists, her second biggest market. However, a 20% discount was instrumental in drawing international clients back to her boutique located in London’s Sloane Square. She commented on the significant number of customers that the discount was able to bring back.
The removal of VAT-free shopping has caused tourist spending to shift towards other European countries such as France and Spain, while the UK has seen a decline. McDonough argues that luxury shopping is an essential draw for tourists, with wider economic benefits. “Luxury is not seen as important in this country,” she said, highlighting the ripple effect it has on other sectors, including hospitality and tourism.
While the Office for Budget Responsibility estimates that scrapping tax-free shopping will save £540 million over the next two years, McDonough believes Labour should reconsider reinstating the perk to boost economic growth. She emphasised that it is not just about luxury goods but the broader experience and spending associated with tourism.
McDonough, who established her business in the 1980s, voiced her worries about the government’s apparent preference for large businesses over small ones like hers. She stressed the need for less bureaucracy and increased backing for budding entrepreneurs. McDonough urged politicians to cultivate an environment that supports risk-taking and business expansion.
A spokesperson for the Treasury reaffirmed that the government is confronted with challenging choices for the forthcoming budget, with the objective of dealing with a £22 billion deficit in the public finances left by the previous administration.
Royal jeweller cuts prices by 20% to counter impact of tourist tax (bmmagazine.co.uk)
