A petition launched by this publication against the UK government’s decision to cancel airside tax free sales and the VAT Retail Export Scheme is nearing enough signatures to prompt an official response.
TRBusiness’ ‘Keep tax-free sales at airports and the VAT Retail Export Scheme’ petition glided past 7,000 signatures last week and is on track to hit 10,000 responses in a critical week when Chancellor Rishi Sunak unveils his Spending Review.
Opposition from businesses, including in the retail sectors, and MPs continues to mount against government to reverse a decision that the Association of International Retail has said leaves 40,000 workers staring at redundancy.
A letter sent to the Chancellor last week, which TRBusiness was aware had been circulating for some time, impressed the gravity of the impacts to Britain’s international standing by removing tax free sales.
Yesterday, ministers faced yet more pressure from the Together for Tourism Alliance, a newly established group of leaders from across the tourism, travel, hospitality and retail industries campaigning against the changes to VAT RES and the airside extra-statutory concession.
In a letter addressed to Prime Minister Boris Johnson as part of an email circular to the Chancellor, Communities Secretary Robert Jendrick and 85 other ministers, the Together for Tourism Alliance claims the abolition of the schemes risks a £10 billion/$13.3 billion loss in tourist sales to other European countries.
It says it will also impact the hotels, hospitality and travel and tourism sectors to the tune of more than £22 billion worth of spending.
The alliance has challenged Whitehall’s assertion that the measures will have little or no affect outside London’s West End via independently commissioned research on the impacts, specifically in the North of England.
“We are calling on the Government to ‘Drop the Shop Tax’ — something which would provide a much-needed boost to the UK’s retail, tourism, travel and hospitality sectors as well as sending a powerful message about the UK becoming a more welcoming destination for international visitors. A truly welcoming Global Britain,” reads the letter.
“If the proposed changes are reversed, our Alliance of business leaders stands ready to act as a partner of Government on the implementation of a fully digital end-to-end solution for managing the VAT Retail Export Scheme, something which has already been developed in the private sector and is used in other European countries.”
The potential removal of the VAT Export Retail Export Scheme would not just impact UK airports, but the high-street as well. Sally Alington, Founder and CEO, Ethos Farm told TRBusiness: “If you think of Selfridges and Bicester Village, they attract international tourists who know they can do their tax refunds either onsite or back at the airport when they are travelling through.”
Allington, who has joined various Groups including the New West End Company, which have been lobbying parliament on the issue added: “In addition to running and owning Ethos Farm, I am also co-chair of the Airport Promotion Agencies, which represents eight member agencies across Europe.
“Blackjack is a member in the UK and does the staffing in the airports. I know the volume of work that goes on in the UK. Some people just don’t even realise. I expect you could tot up how many people work for Harrods Tax Free, World Duty Free or Dixons Travel Retail. These include agency staff, support staff and seasonal staff, along with people which step in to do tactical activations, run pop-up shops and execute Chinese New Year campaigns.
“All these elements are focused on trying to create great experiences and to drive spending in our airports. Brands will no longer want to invest if there is no value proposition. You are going to lose talent because some people may well feel the need to go and get a different job.”
The decision to cancel airside tax free sales and the VAT Retail Export Scheme is ‘so poorly thought through’, according to Alington. “I understand that extending the VAT Retail Export Scheme is going to cost the treasury an extra £1 billion [as they have to give back the VAT on certain sales] and they don’t want to lose that income. The point they are missing though is that people coming here as tourists want to spend money on so many other things.”
She explained: “Currently, international tourists who claim VAT cost the government around £2 billion a year, but they go on to spend £22 billion a year on other products and services on which they can pay VAT. That is less than 10% of the spend they can actually get a refund on.”
Keeping airside tax free sales and the VAT Retail Export Scheme for now is the best way forward. “The government does not need to make a decision right now. We don’t really have an influx of tourists at present due to the coronavirus crisis. Why not wait until the first quarter of 2020, once Britain has left the EU and have a proper debate?”