The decision to scrap UK tax-free was wrong: It is time to be heard

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It has been two years since the UK Government surprisingly, and shockingly, decided to scrap most tax-free shopping in the country. Now, one thing has become clear: That decision was wrong.

This will not be news to many of you. I know that most of my personal professional network was heavily against the decision when it was announced and there was a campaign of voices calling on the Government to reconsider. But they did not and that chorus of voices has faded. It is time to start shouting again.

The arrival of Brexit offered a great opportunity for the UK – and not just its duty-free operators. Reinstating tax-free shopping for EU travellers would have enhanced the UK’s position as a leader in luxury and shopping. But instead, the decision to remove tax-free shopping for all travellers on everything except liquor and tobacco has left the UK trailing far behind.

Europe as a whole has a dedicated place as a home of luxury and culture and this draws high-spending shoppers from around the world. Today, the UK is the only European country not to offer tax-free shopping for non-EU tourists.

The arrival of Brexit offered a great opportunity for the UK, But instead, the decision to remove tax-free shopping has left the UK trailing far behind

Many of us warned this would see shoppers head to competing markets such as Italy or France, and they have. A recent report by Walpole showed that the UK is falling behind its neighbours in retail spend by international visitors as tourists from the Middle East and the US (both thriving luxury markets) choose to go elsewhere in Europe.

There is good news, though. Walpole and other leading retail groups such as the New West End Company and the Association of International Retail (AIR) are already working to encourage the Government to change their position.

AIR Chief Executive Paul Barnes recently said there is a “real possibility” of changing the Government’s minds. This must become more than a possibility; it must become a reality.

Make no mistake, the UK is falling behind. In the last part of last year, spending by US visitors to the EU hit 91% of that seen in 2019, in the UK it was just 49%. The news is even worse with shoppers from the Gulf, who surpassed 2019’s spending in the last part of last year (+153%) but only reached 60% of those levels in the UK.

There is a real possibility of changing the Government’s minds; it must become a reality

There can be no question that the decision to cut tax-free shopping in the UK was wrong. It is now costing retailers, and luxury brands especially, revenue and it is damaging recovery. I am a big advocate of brands and retailers seeking to deliver an exciting and unique experience, but we have to make sure there are shoppers to enjoy it.

The time to make our voices heard is now.

Marco Passoni has decades of experience in the travel retail sector. He has spent the majority of his career in senior leader positions throughout the market, including a 12-year tenure as CEO of a leading international Duty Free distribution company and a further 8 years running a retail firm that operated fashion mono-brand stores in several international airports.
Today, as Senior Executive VP and founding partner of 2.0 & Partners, he leads the company’s efforts in developing and innovating services which create new opportunities and partnerships for all members of the travel retail Trinity. A former elite-level sailor, with a World Championship to his name, Marco now spends much of his time airside, experiencing the changing travel retail industry first-hand, to better guide partners and clients on the best way to do business in this vibrant and unique market.