‘Disastrous’: London airports slam UK Government’s tourist tax
Bosses at three leading UK airports have warned the government that its so-called ‘tourist tax’ is already making Britain a less appealing tourist destination.
Senior figures at London City, Heathrow and Gatwick argued that the return of airside VAT-free shopping would be critical for the sector to finally shake-off Covid-19 and keep pace with international competition.
VAT free shopping for international tourists was removed in 2021 when Prime Minister Rishi Sunak was Chancellor.
Retail businesses and a host of airports have pleaded for its reinstatement, as concerns grow that moneyed shoppers are simply spending their money elsewhere.
Speaking exclusively to City A.M, London City Airport chief executive Robert Sinclair said that the removal of VAT-free shopping was a particularly egregious example of government policy harming UK airports.
Asked to note the government’s most damaging policy decisions in recent years, Sinclair said “one which I would raise is the removal of VAT shopping [which] is something we find… and the whole industry has found very, very disappointing.”
The boss of London’s corporate travel hub said that the reversal of the policy would “substantially help our commercial revenues,” as it closes in on pre-pandemic recovery.
Whilst tourist spending in France surges past 2019 levels at a record €58 billion, the UK falls well short of 2019 levels at £26bn.
Heathrow’s Ross Baker
“It’s not over yet,” he warned, “these things take time.. whilst current profits are good and current passenger numbers are sound, we’re still not back to 2019 levels.”
“So certainty, stability, reliability and I think the avoidance of any further cost increases in the system, whether that’s through taxes or otherwise… is really important.”
Sinclair’s views were joined by Heathrow Airport, whose chief commercial officer, Ross Baker, told City PM that the 2021 decision was “disastrous for UK competitiveness as tourist spend in the UK is now eclipsed by our European neighbours, where goods are up to 20 per cent cheaper.”
“Whilst tourist spending in France surges past 2019 levels at a record €58 billion, the UK falls well short of 2019 levels at £26bn.”
He added: “Heathrow echoes calls urging the government to take up the opportunity to introduce a new digital tax-free shopping incentive, which would reinstate the UK’s international competitiveness and deliver economic growth to every part of the country.”
Nick Williams, head of retail operations at Gatwick, said that the reinstatement of tax-free shopping was “imperative, as key, big-spending travel markets like China reopen, and before the UK falls irretrievably behind other European nations that have tax-free shopping in place.”
Karen Dee, chief executive of the trade body Airport Operators Association (AOA) said: “our members know the value this will bring to all parts of the UK, helping every region to grow and that is why we are calling on government to reconsider its position on VAT-free shopping for international tourists.”