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Pressure on Treasury

Forbes backs call to retain tax-free visitor shopping

high street shopping at Easter

Retailers say the change will be another blow (pic: Terry Murden)

Retailers and the Scottish Finance Secretary are urging the Treasury to reverse its decision to end tax-free shopping for international visitors.

The Scottish Retail Consortium argues that the VAT Retail Export Scheme encourages high street spending from international tourists visiting Scotland and the rest of the UK.

A decision to scrap the scheme from January is expected to deliver a further blow to hard-pressed high streets.

Last month the SRC wrote to the UK and Scottish governments and last week raised the matter directly with Ministers from the Scotland Office and Scottish Government.

The Finance Secretary Kate Forbes said in a written parliamentary answer that she shares the concerns of the Scottish retail and tourism industries over the ‘abrupt’ withdrawal of tax free shopping, which she adds could have substantial implications for the two sectors.

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David Lonsdale, director of the SRC, said: “The UK Government needs to reconsider its decision to scrap the VAT Retail Export Scheme.

“That scheme encourages high street spending from international tourists visiting Scotland and the rest of the UK.

“The Finance Secretary’s comments are a timely and welcome intervention in support of city centres. 

“With retail in our city centres often already depressed by the ongoing pandemic, it is astonishing the UK Government would seek to reduce a key source of income and potential recovery for shops.

“The decision could cost Edinburgh city centre, for example, many millions in lost retail sales, let alone the knock-on impact on tourism. 

“This decision would leave the UK as the only European country not to provide a tax-free shopping scheme to encourage tourism. There is a good reason no other European nation has taken this step, and we urge swift reconsideration.”

Parliamentary question:

Jackie Baillie MSP (Scottish Labour, Dumbarton): To ask the Scottish Government what (a) representations it has received on and (b) assessment it has made of the impact on the Scottish retail and tourism sectors of the UK Government’s decision to withdraw tax-free shopping from the start of 2021. (S5W-32006)

Finance Secretary Kate Forbes: This change was announced suddenly by the UK Government and, despite the obvious and substantial implications for the Scottish retail and tourism sectors, without prior engagement with Scottish Government officials.

Accordingly, we have had no opportunity to carry out analysis of our own and none has been shared by the UK Government. Since this announcement, the Scottish Government has received representations from a number of stakeholder organisations expressing concerns about the impact on trade and the wider economy.

We share their concerns and do not believe that this is an appropriate juncture at which to make such an abrupt and significant change.

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