MPs are pushing for concrete evidence from the Treasury regarding the controversial decision to end tax-free shopping for tourists at UK airports starting next year. The move has sparked concerns among retailers and government officials alike, prompting the Treasury Committee, led by Chairman Mel Stride, to request Chancellor Rishi Sunak to provide a detailed cost analysis of the changes.
There is growing unease after it emerged that the government’s consultation process may have misled retailers into believing that duty-free shopping would be expanded to EU tourists, rather than restricted as planned. The decision to discontinue allowing non-EU overseas shoppers to claim back VAT at airports in 2021 is part of a strategy to increase annual VAT receipts by £500 million. However, retailers argue that this estimate is overly optimistic as the lack of tax-free shopping incentives may deter tourists from visiting Britain for shopping.
Moreover, the proposed alternative of shipping goods home instead of carrying them personally may not be appealing to the majority of tourists. Mel Stride has voiced concerns about the potential negative impact on retailers, as well as the perception of the UK imposing tariffs on its own exports. He stressed the importance of transparency in major policy shifts and called for a more comprehensive cost assessment to be disclosed.
The abrupt implementation of the changes in a discreet manner last month has led to suspicions among MPs, who are seeking clarification on the government’s motives and the potential repercussions of the decision. As the debate continues, it remains crucial for all stakeholders to engage in constructive dialogue to address the concerns raised and find a mutually beneficial solution.
To learn more about the impact of the decision to end tax-free shopping for tourists, visit this BBC article or check out the detailed analysis provided by the Financial Times.
