Following pressure from the Treasury Committee, the Government
yesterday published an impact assessment (Tax Information and
Impact Note (TIIN)) for tax changes that will come into force
next month.
The Government announced in September 2020 that in January 2021
it will end the VAT Retail Export Scheme (RES), which allows
non-EU visitors to the UK to claim a VAT refund from customs when
leaving the country.
By effectively abolishing tax-free shopping for non-EU visitors
to the UK, the Committee has heard evidence that ending VAT RES
will lead to fewer high spending tourists visiting the UK from
places such as America, China and the Middle East.
The Office for Budget Responsibility (OBR) has confirmed that
this is the case and also states that those coming will spend
less.
, Financial Secretary to the Treasury, wrote
to , Chair of the Treasury Committee, about the
impact assessment for these tax changes.
Commenting on the correspondence and the impact assessment, Mr
Stride said:
“Following correspondence with the Treasury, I’m pleased that
the Government has listened to the Committee and published an
impact assessment, although it would have been helpful if this
had been published earlier.
“No estimate of the effects on the wider tourism and leisure
sectors has been provided. These sectors will be worried that up
to 30,000 tourists, many of whom are high spending, could be
dissuaded from visiting the UK.
“The Government should now commission an independent
evaluation of the effects of the measure and publish it.”
--Ends--
Notes to Editors
- The TIIN, published on 3 December, is here.
- Paragraph A.22 on page 183 of the OBR’s latest Economic and
Fiscal Outlook (here) refers to the
abolition of the VAT RES.
- Mr Stride wrote to the Chancellor on 8 October here. Commenting at the
time, Mr Stride said:
“The Committee has been told that this will be a major blow
to many retailers serving the struggling tourism sector. It could
be seen as the UK imposing a tariff on its own exports.
“Witnesses in a Treasury Committee evidence session yesterday
raised concerns about the Government’s consultation that drove
these changes to VAT.
“I’ve asked the Chancellor to provide the Committee with the
cost benefit analysis behind these decisions so that we can
consider these issues further.”
- The response from the Economic Secretary to the Treasury from
6 November is here.
- Mr Stride wrote to the Financial Secretary to the Treasury on
24 November here, urging the
Government to make tax policy announcements at the next
available fiscal event. Mr Stride also expressed concern that
the Government was yet to publish impact assessments for the
abolition of the VAT RES and airside duty free ESC. Commenting
at the time, Mr Stride said:
“Tax policy announcements have been scattered throughout the
year rather than, as is customary, at fiscal events.
“Whilst it has been far from a typical year, the Government
must not use this as a precedent for the future.
“One of the key principles of effective tax policy making is
predictability. Where possible, the Government must ensure that
it makes tax policy announcements at the next available fiscal
event.”
- The Financial Secretary to the Treasury’s response, dated 2
December 2020, is attached.
