The UK Election: Time to put tax-free shopping to a vote

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By Marco Passoni

This week, the UK Government announced an election will be held in July. Rishi Sunak, the current Prime Minister is the mastermind behind, for me, one of the most ill-conceived and damaging economic policies I have seen – the abolition of VAT-free shopping.

The decision, taken in the wake of Brexit in 2021 has cost the country billions of pounds and millions in visitor numbers. As Chinese outbound travel begins to recover, and Chinese shoppers go searching for luxury shopping which is cheaper than that in their domestic market, the cost to the UK can only rise. The politicians had their chance to act. I for one am still amazed that the government declared in March that they had reviewed the policy and would let it stand. But now the people have a chance to have a say.

As Chinese outbound travel begins to recover, and Chinese shoppers go searching for luxury shopping which is cheaper than that in their domestic market, the cost to the UK can only rise.

The current Prime Minister was in charge of the country’s finances when this ridiculous plan was put in place and it is a scheme which was launched without proper thought or consultation and which has been kept despite endless warnings – and proof – from the luxury and retail community.

20partners tax-free-uk-vote The UK Election: Time to put tax-free shopping to a vote Journal  Tourist Tax tax-free

Make no mistake, if international shoppers cannot take advantage of a price difference in the UK, then they will shop in Paris, or Milan. They are already doing so. And if European shoppers get no advantage from shopping in London, why would they bother carrying it? At the last count, this policy has cost the country more than £11 billion in revenue.

High-spending shoppers groups from the Middle East and Asia Pacific are already avoiding a return to London, with traveller numbers to neighbouring major cities recovering far faster. This cannot be – and is not – a coincidence. It is cause and effect. Why would shoppers from the rest of the world come to London or the UK when it is more expensive to shop? Price is an incredibly important issue for the travelling shopper and our customers are more informed than ever.

Why would shoppers from the rest of the world come to London or the UK when it is more expensive to shop? Price is an incredibly important issue for the travelling shopper.

Unfortunately, our politicians are not equally informed: i March we were told that, after a review, keeping the tax-free shopping ban in place is “appropriate”. It is madness. Business leaders and the travel retail industry warned of the damage this would do, and we have continued to show the very real and measurable damage the policy is doing to both business and the UK’s appeal as a tourist and retail destination. But those in charge continue to fail to understand the reality.

So now, we must hope that some politicians see sense and put this issue in their plans for the election. The Scottish government has backed the return of tax-free shopping, and London Mayor Sadiq Khan has done the same. We can only hope that his party and leader Sir Kier Starmer listen and agree. When the country goes to vote in July, maybe we will have a chance to put an end to one of the worst political economic decisions I have seen in a very long time.

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.