UK retailers, hoteliers and airport chiefs have warned the chancellor that scrapping tax-free shopping for international tourists has put 70,000 jobs in jeopardy.
Earlier this month the Treasury said that the retail scheme, which enables non-EU visitors to reclaim VAT paid on their purchases, would finish at the end of December. The Treasury says it is making use of the end of the Brexit transition period to bring personal duty and tax systems in line with international norms.
The move has caused a huge storm in retail and tourism circles with Marks & Spencer, Selfridges and the owners of high end designer outlet mall Bicester Village among the business putting their names to a letter urging the chancellor to think again.
Other signatories include the bosses of major airports including Heathrow, Gatwick and Birmingham.
The decision will leave Britain as the only country in Europe without a tax-free shopping scheme for international visitors. The fear is that without the perk this high spending group of travellers, who fly in from China and the Middle East, will go elsewhere. It comes at a time when city centres around the UK are struggling to recover from the pandemic, a situation that has already led to tens of thousands of jobs losses.
Paul Barnes, chief executive of the Association of International Retail, described it as a devastating decision that would lead to the loss of tens of thousands of tourism and retail jobs right across the UK.
“Madrid, Milan and Paris are rubbing their hands with glee at this self-inflicted wound,” said Barnes. “If we charge a fifth more for the same goods, international visitors will not hesitate to switch their city breaks to other countries and the stores and jobs will follow within months.”
While international tourists reclaim VAT on £2.5 billion of purchases, they pay VAT on the rest of the £22 billion they spend.
The luxury handbag brand Mulberry also criticised what it said was a “short-sighted” move. The Somerset-based firm is the largest manufacturer of luxury leather goods in the UK and Thierry Andretta, the chief executive, warned it would “have a material impact on jobs and manufacturing in this sector”.
Gallery: Rich countries where businesses pay the lowest taxes (Lovemoney)