As airports up and down the UK prepare themselves for an inevitable rise in the tourist tax, some of Britain’s most luxurious goods brands have come forward to speak out against the controversial move. Harrods, famous for its outrageously priced handbags, has been particularly hard hit and is now being forced to sell cheaper alternatives. The Daily Mail takes an in-depth look at this tricky situation.
1. Harrods Forced to Sell Cheaper Handbags
The famously luxurious department store Harrods was ordered to make a big change in its product selection in 2020. According to the Competition and Markets Authority, Harrods must start stocking cheaper handbags in the Harrods Designer Room to provide more consumer choice.
The ruling has stirred up a lot of attention, as customers who shop Harrods for the experience of luxury now have access to more affordable bags. This made it possible for the average person to experience the opulence of the store and have a chance to own a piece of shopping history.
- High-End and Affordable Labels – Allowing more accessible labels into Harrods means that there is a much wider variety of stylish and fashionable bags to choose from.
- More Consumer Choice – With more available options, visitors have a higher chance of finding exactly what they are looking for.
- Award-Winning Services – Harrods prides itself in its award-winning services. Whether shopping the Designer Room or the other areas of the store, customers know they are in for a unique experience.
2. Luxury Brands Denounce Tourist Tax
As the city of Paris sets out to introduce a new tax on visitors, major luxury brands are voicing their dissent. This ‘tourist tax’ would impose a 15% charge to visitors for shopping in the city, something not to be taken lightly by those who depend on the influx of tourism.
For elegant fashion houses such as Chanel and Christian Dior, the idea of such a tax is nothing short of outrageous. While the funds generated by the tax likely would be used to help support services such as public transportation, lighting and parks – amenities that appeal to tourists – the sector feels that this could cause a dip in visits to the destination.
- Opponents to the plan assert that many travelers may consider other destinations that don’t have a tax imposed on their goods.
- Arguments exist on either side, with those in support of the plan citing the value that these taxes can have in mitigating over-tourism.
High-end designer brands have been long considered a cornerstone of luxury tourism. Hurting the brands – and their well-heeled customers – would effectively damage a key aspect of the city’s economy.
- The sector believes the effects of the tourist tax would be rather drastic, leading to a decrease in discretionary spending from luxury visitors.
- It’s uncertain what will come of the debate, but the verdict of the luxury sector appears to be in full opposition to the proposition.
3. How Will the UK’s New Tax Impact Consumers?
The newly-proposed UK tax plan is set to have a major effect on the average consumer. With so many elements to consider, it’s important for citizens to understand what this will mean for their wallets.
- Households on low income – those earning less than £12,500 annually – will be offered a reprieve, with no income tax to be paid. This could result in an annual savings of up to £1,000 for many households.
- Those earning between £12,500 and £50,000 a year will be taxed at a rate of 20%. Above this range, taxpayers will pay a rate of 40%.
In addition, personal tax allowance is increasing overall – up £650 from the previous financial year. This will help to ensure that people on average incomes will now have access to more of their money. At the same time, the government is cutting corporation tax from its current 19% to just 17%, the lowest rate for over a decade. This could cost citizens in the long term, though, as fewer taxes paid by larger companies can mean fewer public services available.
4. Will This Threaten High-End Shopping?
High-end shopping has been a source of enjoyment for many people, so it’s understandable to be concerned about its future when considering the rise of online shopping. On one hand, online stores offer convenience and often better value. On the other hand, there’s something about wandering through luxurious stores with the promise of a unique shopping experience that appeals to many.
The truth is that online and high-end shopping have their own strengths. By bringing the two together, there are plenty of opportunities to benefit from both worlds at the same time. For example, online stores may consider offering ‘virtual experiences’ to help evoke a feeling of an exclusive shopping experience. With events like virtual fashion shows, personalised styling recommendations, and immersive 3D visuals of product listings, shoppers have more reasons than ever to spend their money online.
- Online shopping may offer better value
- High-end shopping often offer an exclusive experience
- Combining the two offer exciting opportunities
A potentially disastrous precedent has been set; the introduction of the tourist tax has challenged London’s luxury goods industry to the point of desperation, and failure to meet the demands of the tax could spell financial ruin for many established luxury brands. Yet this call for help might fall on deaf ears and it will remain to be seen if the current situation is ever resolved.
