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Fri, 4 December 2020

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Scrapping tax-free shopping will discourage international visitors and put thousands of jobs at risk

Scrapping tax-free shopping will discourage international visitors and put thousands of jobs at risk

We need to be focusing on making the UK as competitive and attractive to tourists as possible, writes Henry Smith MP. | PA Images

3 min read

We should be extending schemes, such as tax free shopping, that already entice international visitors to our EU neighbours - not cutting them.

It’s true to say Covid-19 is unpredictable. It certainly transcends borders. We know the areas with the highest infection rates will be hit hardest economically, and it is important that corners of the UK are protected throughout the next six months, which is why I support the government in many of the measures they have set out. 

Our ability to Build Back Better is clearly going to be determined on how well we manage to protect and create jobs and ensure key industries that were buoyant pre-Covid, like tourism, are ready to go again.

The Job Support Scheme and Bounce Back Loans, amongst others, have all provided necessary support, and were developed at pace whilst the government was under unprecedented strain. Measures taken by the Transport Secretary mean international passenger numbers handled at UK airports rose fourfold between June and July to 3.1 million passengers.

The international tourism sector supports jobs throughout the country and across the supply chain: from airports and hotels to rental car hire services and theatres. 

Gatwick Airport in my constituency acts as a global gateway to Britain, providing and supporting a combined more than 31,200 jobs. A significant decline in global travel has put many of these at risk. But we know that most of these jobs are viable once the virus subsides.

We therefore need to be focusing on making the UK as competitive and attractive to tourists as possible, so we are ready to welcome back visitors quickly. We shouldn’t be putting up barriers.

Brexit provides us with an opportunity to put us at a competitive advantage over Europe. We should be extending schemes that already entice international visitors to our EU neighbours, not cutting them. Tax-free shopping, which allows visitors to reclaim the VAT on the goods they buy from, is a good example.

Jobs across the country, and throughout my constituency, have been put at risk by this decision

Businesses throughout the country had assumed the government would extend the scheme at the end of the year, and some stores in Manchester and Birmingham had planned for a doubling of sales to EU visitors. The Treasury has instead announced plans to scrap the scheme in its entirety, putting up to 41,000 jobs throughout the UK at risk.

I am grateful to the Chancellor for committing to look at the decision again, but worry that the Treasury has undervalued how much the pull factor is for visitors – who often come via Gatwick airport – making higher value purchases.

High-spending visitors account for a disproportionate amount of tax-free shopping (around a fifth of users are responsible for about half of all tax-free shopping), and will opt to shop in say, Paris, which has recently reduced the amount a visitor has to spend in order to qualify for tax-free shopping, rather than London. In fact, a poll of 3,000 high spending travellers found that 60% would no longer visit the UK if the scheme was abolished. 

I have no doubt that this behavioural change will lead to job losses and although the Treasury has put in place great measures to support jobs throughout the pandemic, this support should be targeted at those at risk because of Covid-19.

I know the Chancellor is looking into this issue, but time is running out. Jobs across the country, and throughout my constituency, have been put at risk by this decision. I hope HM Treasury will assess the evidence and come to the right conclusion – both morally and economically.

 

Henry Smith is the Conservative MP for Crawley.

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