Heathrow could lose 2,000 retail jobs because of the government’s decision not to offer tax-free shopping for tourists, according to the airport’s chief executive.
John Holland-Kaye said the move, which will make the UK the only country in Europe to have a “tourist tax” on international visitors, could be the “final nail in the coffin” for many struggling businesses in the retail and hospitality sectors.
He said: “2021 should be the year of Britain’s economic recovery but recent announcements, such as the tourist tax, could be the final nail in the coffin for struggling businesses such as restaurants, hotels and theatres that rely on inbound tourists, as well as for retailers.”
Passenger numbers at Heathrow fell by 88% in November as travel restrictions and a second coronavirus lockdown took their toll. Cargo flights were also well down. The airport said that based on current forecasts and a continued decline in passengers, it had decided that Terminal 4 would remain nonoperational until the end of next year.
Holland-Kaye said the industry needed government support including full business rates relief for all UK airports and abandoning the “tourist tax”.
Heathrow has partnered with British Airways, American Airlines, United Airlines and Virgin Atlantic on a cross-industry study aimed at eradicating the need for quarantine for passengers. The study is aiming to prove the effectiveness of pre-departure testing in reducing transmission while making free movement easier.
“To make global Britain a reality, the government should be helping the aviation sector to survive, to develop routes to our key trading partners and attract businesses and tourists to come to Britain to spend their money,” Holland-Kaye said.
Under new tax rules being introduced by the chancellor, Rishi Sunak, overseas visitors will no longer be able to benefit from tax-free sales and VAT relief on goods purchased in the UK from 1 January. The government has said that continuing to offer tax-free shopping is too expensive to administer, and that retailers who offer the service are putting other high street retailers at a competitive disadvantage However, trade bodies and retailers have all opposed the change.
The bosses of retailers including Marks & Spencer, Superdry, Mulberry, Paul Smith, Ted Baker, Charles Tyrwhitt and Hackett have written to the chancellor to express their opposition to the new tax rules.
Scottish business leaders have said the changes represent a “clear and present risk” to tourism and jobs in the UK and have called on Sunak to “urgently reconsider” the decision.
Heathrow is facing strike action by workers this month over “fire and rehire” plans that have cut the wages of long-serving staff, in an increasingly bitter dispute.
In October, Heathrow lost its place as Europe’s busiest airport for the first time after being overtaken by Paris’s Charles de Gaulle.
