Planned Tourist VAT Hike Will Hit Red Wall Jobs, Benefit EU’s Duty Free Shoppers

Planned Tourist VAT Hike Will Hit Red Wall Jobs, Benefit EU’s Duty Free Shoppers

Ahead of Sunak’s spending review tomorrow, research from a new group of leaders in tourism, travel, hospitality and retail across the country implores the Chancellor to scrap plans to abolish the VAT Retail Export Scheme from January 2021, with figures suggesting the move will impact over £22 billion worth of spending on the travel industry by international visitors; with the North and Midlands set to account for almost one-fifth of total UK impact. A double whammy policy betrayal of both old and new Tory principles simultaneously…

The planned move by the Treasury will end the VAT rebate scheme that allows non-EU international visitors to receive a refund on the VAT from certain purchases made in the UK; with new figures from the Together for Tourism Alliance showing the hike “risks a loss of £10 billion in tourist sales” to other European countries who will continue to offer the scheme. Within the West Midlands alone, they estimate up to 13,500 jobs could be at risk in the core red wall…

The retail private sector wants a digitised end-to-end software solution, at no expense to the taxpayer. They are pledging millions to develop software for a digital customs infrastructure – as Turkey, Portugal, Spain, Italy and France have done to keep the revenue from international tourists coming in. Retailers, airports and ports have taken the initiative and digitised their point-of-sale for international customers. Taxpayers will benefit from a thriving retail sector that makes its contribution to an economic recovery.

The proposal from Sunak to abolish duty free shopping come as the Irish government has sensibly gone down the opposite route, reducing the minimum purchase threshold for tax-free shopping from €175 to €75 to “to ensure that Irish retailers are supported in this extraordinary time.” Not only does this boost the attractiveness of the UK’s closest neighbour to foreign shoppers, it means UK consumers could fly to Dublin and spend €75 on shopping with no VAT charge. If Dublin is reducing taxes to support retailers, what message does the UK’s government policy send to tourists? 



* This article was originally published by Guido Fawkes

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