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NAJ joins campaign to reverse scrapping of VAT-free shopping for International Visitors

05 Oct 2020

748 VAT-free shopping NAJ

The National Association of Jewellers has joined 15 other trade bodies to campaign against government plans to end VAT-free shopping for international visitors at the end of the year.

The plans could cost the UK billions of pounds in lost income, and the campaign which is being led by the Association of International Retail now has the full support of the National Association of Jewellers.

On joining the campaign, NAJ Chair Gary Wroe said,

“A number of our members will be greatly impacted by this planned abolishment, not just in London but also across major UK cities, where inner city retail has already been hit hard with the effects of COVID-19.”

“If these plans were to go ahead, it would leave Britain as the only European country not offering tax free shopping, which will likely lead to high spending international visitors avoiding Britain’s jewellery stores as a shopping destination for jewellery and watches.”

A Cebr report published by the New West End Company and Global Blue claimed that the effects of abolishing the current scheme for non-EU visitors provided the following ‘cautious assumptions’:

  • The number of non-EU visitors to the UK will be reduced by 7.3% or 1,168,000
  • The total decrease in spending by tourists resulting from the ending of the VAT Retail Export Scheme is estimated to be between £1.1 billion and £1.8 billion
  • After taking account of knock on effects GVA is reduced by £1.8 -£2.8 billion.
  • We estimate that between 27,000 and 41,000 jobs will be lost
  • And that far from gaining the theoretical £521 million, the loss of economic activity would mean that tax revenues were net reduced by £270 – 680 million.

However, with preferences emerging from the research are correct, the ‘cautious assumptions are in many cases highlighted as ‘too low’, with the following ‘actual real-life impact’ presented as much higher:

  • Abolition of tax free would reduce the number of visitors by 31% or 4.96 million.
  • Their spending would be reduced by over £6 billion.
  • GVA is £9.3 billion lower causing a reduction in employment of 138,423
  • And after taking the gains from the abolition of the tax relief into account, tax revenues are £3,492 million lower.

View Report

The Association for International Retail has already written to the Chancellor of the Exchequer calling for the plans to be reversed. The letter, which has been signed by 21 senior CEOs ends with,

“We believe that there is a way, working with industry, to create a first-class tax-free shopping system that will enhance the UK’s current position as a global shopping and tourist destination and grow its financial contribution to the UK economy.

“If tax free shopping were extended to the EU, despite our current challenges, we are optimistic about the future. The current decision will inevitably lead quickly to a decline in the international standing of Britain and London as global destinations and be a drain on the UK’s economy with no cost-saving for the Treasury.”

The Association for International Retail has also provided briefings which are available to view.

Source: The National Association of Jewellers