British retailers, hoteliers and airport managers have warned the Chancellor that cutting duty-free shopping for international tourists has put 70,000 jobs at risk.
Earlier this month, the Treasury said the retail program, which allows non-EU visitors to reclaim VAT paid on their purchases, would end at the end of December. The Treasury says it is using the end of the Brexit transition period to bring personal rights and taxation systems in line with international standards.
The move caused a huge storm in retail and tourism circles with Marks & Spencer, Selfridges and the owners of the upscale Bicester Village shopping center among the companies putting their names on a letter urging the Chancellor to think about new.
Other signatories include the bosses of major airports including Heathrow, Gatwick and Birmingham.
The move will leave Britain as the only country in Europe not to have a duty-free shopping program for international visitors. The fear is that without this perk, a group of high-spenders, arriving from China and the Middle East, will go elsewhere. It comes at a time when city centers across the UK are struggling to recover from the pandemic, a situation which has already resulted in tens of thousands of job losses.
Paul Barnes, managing director of the Association of International Retail, described it as a devastating move that would result in the loss of tens of thousands of tourism and retail jobs across the UK.
“Madrid, Milan and Paris are rubbing their hands with joy at this self-inflicted injury,” Barnes said. “If we charge a fifth more for the same products, international visitors will not hesitate to move their city trips to other countries and stores and jobs will follow in a few months.
While international tourists reclaim VAT on £ 2.5bn in purchases, they pay VAT on the remainder of the £ 22bn they spend.
Luxury handbag brand Mulberry also criticized what it called “myopic.” The Somerset-based company is the largest manufacturer of luxury leather goods in the UK and Thierry Andretta, managing director, warned that this would “have a significant impact on employment and manufacturing in this sector”.