Friday, June 21, 2024

Heathrow warns lack of tax-free shopping hindering “potential to help grow the country’s economy” – TheIndustry.fashion

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The loss of tax-free shopping is stopping the “UK aviation’s ability to compete globally”, according to Heathrow’s Chief Executive Thomas Woldbye.

Heathrow, Britain’s biggest airport, has criticised the decision taken by Rishi Sunak, when he was chancellor in 2020, to scrap tax-free shopping for international visitors. In addition, he introduced a £10 charge for visa-exempt passengers arriving in the UK last year.

These measures are “curtailing the UK’s global connectivity”, Heathrow told The Telegraph.

Heathrow announced it was on track for its busiest year on record after passenger numbers rose by 4.8% last month to 6.7 million. However, Thomas Woldbye, Chief Executive of Heathrow, said: “To unlock our full potential to help grow the country’s economy, we need the Government to implement policies that support UK aviation’s ability to compete globally.”

Nationals from Bahrain, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates are now required to pay a £10 fee when they change flights at Heathrow or enter the UK for a limited period without a legal residence or visa.

Heathrow argued that applying the scheme to transit passengers puts UK airports at a disadvantage to European hubs such as Paris and Amsterdam. However, The Treasury claimed that scrapping the tax would cost the exchequer £2 billion.

Heathrow said: “Initiatives like the introduction of unnecessary visas for transiting passengers, the absence of tax-free shopping and the recently proposed hike in business rates underscore the need for ministers to take a cross-government approach to policymaking.”

A government spokesman responded: “The UK aviation industry is one of the best in the world and we remain committed to supporting airports to boost our global connectivity and grow our economy.

“Requiring transit passengers to obtain an Electronic Travel Authorisation ensures we are making the border more secure, and stops people who may use connecting flights to avoid gaining their permission to travel to the UK when they do not have it. We are keeping this under review as we continue to roll out the scheme.”

Heathrow’s comments come after Selfridges said it was in “the process of making proposed changes” to its head office, which will see its workforce reduced by 2% to counteract slipping revenues. The retailer blamed the slowdown in luxury spending on the “continued absence of a tax-free shopping scheme”.

This also follows British luxury retailers including Mulberry and Burberry warning the industry about the dangers of scrapping VAT-free shopping for tourists. Last week, Mulberry reported that its revenues declined by 4% in the fiscal year, reflecting weak demand for its products as luxury spending slows. Similarly, Burberry issued a profit warning, putting it at risk of a takeover since losing a fifth of its value since the beginning of 2024.

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