Heathrow Airport urges UK government to reconsider VAT-free shopping

Heathrow Airport, a critical gateway for global travel, has issued a warning against the adverse impacts of the UK’s recent abolition of VAT-free shopping, thisismoney.co.uk has reported.

Describing the move as a ‘tourist tax’, Heathrow highlights the detrimental effects on inbound tourism and the broader economic landscape. Teaming up with influential bodies including the British Chambers of Commerce and the Federation of Small Businesses, Heathrow is leading a campaign to reinstate an internationally competitive tax-free shopping incentive.

‘While exports are thriving, Britain has shut the door on home-grown growth, turning away international shoppers through the tourist tax and tarnishing the UK’s reputation as a competitive country to spend and do business with,’ Heathrow said.

The decision to eliminate VAT-free shopping, enacted three years ago under former Chancellor Rishi Sunak, has drawn widespread criticism from retailers, companies, and brands across the UK.

Heathrow urges reinstating this vital incentive, noting its pivotal role in driving economic growth and supporting job creation. Despite concerns raised by HM Treasury regarding the associated costs, independent studies indicate the potential for a significant boost to the economy, projecting an injection of over £10 billion annually and the creation of approximately 78,000 jobs.

The Office for Budget Responsibility is to conduct a comprehensive cost-benefit analysis of the ‘tourist tax’, providing some optimism for a reversal.

Heathrow Airport has further commented that recent passenger statistics indicate a gradual recovery in travel volumes following the pandemic. Despite the progress, regulatory constraints pose challenges to the airport’s earnings potential, necessitating a balanced approach to recovery efforts, the report noted.