Commons Sense

House of Commons · Ministers' Questions

VAT Retail Export Scheme

Tuesday 26 January 2021 · 2 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 1 Partly answered 1 Not answered 0

Key points

  • During the consultation on duty free and tax-free goods carried by passengers in 2020, the Government engaged extensively with various stakeholders, including retail and aviation representatives.
  • The independent Office for Budget Responsibility assessed the fiscal impact of the withdrawal of the VAT Retail Export Scheme, factoring in a higher than usual elasticity for luxury goods spending.
  • The Office for Budget Responsibility estimates that the withdrawal of the VAT Retail Export Scheme will result in a significant Exchequer gain.

Topics (select to filter)

Questions & Answers

Q1 Gavin Newlands SNP
Taxation Business & Trade
Context

The question follows a consultation on duty free and tax-free goods carried by passengers in 2020, where the Government engaged extensively with stakeholders. The question raises concerns about the impact of scrapping these schemes on retail and aviation industries.

Question

What discussions has he had with representatives of the (a) retail and (b) aviation industries on the VAT retail export scheme and airside extra statutory concessions?

Answer from Kemi Badenoch

During the consultation on duty free and tax-free goods carried by passengers in 2020, the Government engaged extensively with various stakeholders and carefully considered 73 consultation responses. I have continued to meet stakeholders, including retail and aviation representatives, following our announcement.

Answered
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Q2 Gavin Newlands SNP
Economy Taxation Business & Trade
Context

The retail sector is struggling with chains like Debenhams closing, resulting in job losses. The aviation industry, including Stansted Airport, faces challenges due to the grounding of flights during the pandemic.

Question

Given the deep trouble within retail and aviation, with Debenhams one of many chains disappearing from high streets with the loss of tens of thousands of jobs and, as the Minister will be aware with Stansted and its importance for employment in her constituency, aviation by and large grounded, does she not accept it was a mistake to scrap the VAT retail export scheme and the extra-statutory concessions, both of which brought much needed revenue to the retail sector at airports, which is now lost from the economy, possibly for good?

Answer from Kemi Badenoch

We do not accept that. The independent Office for Budget Responsibility set out its assessment of the fiscal impact of the withdrawal of the VAT RES scheme, factoring in a higher than usual elasticity to account for spending on luxury goods. Its estimate is that this will result in a significant Exchequer saving of about £400 million per year. On airports, we recognise the challenges the aviation sector is facing as it recovers from the impacts of covid-19. We have supported the sector throughout the pandemic and continue to do so. This includes the recently announced airport and ground operator support scheme, which will provide eligible firms with support of up to £8 million per claimant.

Partly answered

Not addressed: The specific ask about acknowledging a mistake in scrapping the schemes was not directly addressed.

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