The British Treasury has announced that it will end the scheme which allows non-EU tourists to recover VAT on their purchases.
But the move has sparked fury from UK manufacturing, tourism and retail companies who have urged the government to review plans.
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According to a report published in Cebr, Edinburgh is said to be the hardest-hit city in the UK by the decision to be one of the country’s top tourist destinations where as many as 1,800 jobs could be lost.
UK Government Chancellor RIshi Sunak has said he is using the end of the Brexit transition period to bring UK tax and customs systems in line with those of other countries.
Douglas McWilliams, Cebr, said: “This decision does not make sense when retail and tourism are under the nose. It will cost the Treasury money – a minimum of £ 1/4 billion and probably a lot more.
“It will reduce tourism. And it will curtail retail activity, draining jobs from suppliers across the country.
“Instead, it would be better to extend the program to European tourists, attracting almost a million additional visitors to the UK and increasing tax revenue from additional income tax, national insurance, corporate tax and VAT on other elements of tourism and expenditure. ”
Kylie Wilson, Head of Marketing at Livingston Designer Outlet in West Lothian, said: “The Livingston Designer Outlet is part of Edinburgh and Lothians with a tourism economy of £ 1.1 billion. With the region a part of every 2 out of 3 international visits to Scotland, the Overseas Tourist is a key outlet group.
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“With an already very difficult climate throughout Scotland’s retail and leisure sector, the removal of a key benefit such as Tax Free Shopping, which attracts international tourists from all over the world to the store, is putting pressure extra and unnecessary on owners. International buyers spend more per transaction, on average three times as much as the domestic buyer, and as such, international tourism is a key part of the success, sustainability and longevity of outlets such as Livingston Designer Outlet.