Exiting the European Union (Excise)

Anthony Browne Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con) [V]]

I very much welcome these three measures on duty-free changes and travellers’ allowances.

First, on the return of duty-free, when, a few years ago, I was asked by The Sun newspaper to come up with some ideas for any possible benefits of Brexit, the return of duty-free was one of them, and it got widespread acclaim at the time. I mentioned the huge national groan 20 years ago when it was abolished. Tony Blair tried to stop it being scrapped but failed because of single market rules. I declare an interest as someone who has used it when I visited friends and family around the EU and would buy a bottle of duty-free whisky on the way out. It is a tax break that may not be that economically efficient on traditional measures, but is really popular and great fun. It is a tax break for the many, not the few. The Treasury should use not a benefit-cost ratio, as it normally does, but a fun-cost ratio. It is very popular with the public. As we have heard, booze cruises will be returning when we are allowed to have them. I think that will be welcomed up and down the nation, as well as in regional airports, which will benefit massively.

Secondly, on the quadrupling of the alcohol allowance, I, for one, thought the old allowances were quite mean with just one case of wine, so I certainly welcome having two cases. I think most of the British public would also welcome that. As somebody who is favour of free trade, low tariffs and low allowances, I absolutely support a move in that direction.

Thirdly, on the retail export scheme, which is the most controversial issue and the reason the SNP is opposing these measures, I support abolishing for two reasons: first, it is not good value; and secondly, it is not fair. Basically, it is a tax break for wealthy foreigners coming to do shopping for high-value goods in the UK, but it is not good value because it is actually not that widely used. Fewer than 10% of non-EU visitors currently use it. There is a good reason for that: the fees for using it charged by the shops’ administrators are so high that often 70% of the refund ends up going to them. It is not surprising, therefore, that the shops’ administrators have launched a rearguard action to try to stop its abolition. Because it is used so limitedly, it reduces travel costs by only about 6%, and that is not enough to make the difference for most people as to whether they will travel or not travel to buy something. Indeed, research by Her Majesty’s Revenue and Customs has shown that two thirds of visitors would have bought the goods anyway.

There is also—this has not been mentioned by SNP and Labour Members—the opportunity cost. The Government have to either extend the scheme to the whole EU or abolish it outright. Keeping it would cost the Government £1.4 billion. That is £1.4 billion the Government could do other things with. There are far better ways to save jobs, create jobs, help the high street and help retail than to give a tax break to wealthy tourists buying high-value goods. For example, the Government are currently looking at the reform of business rates—a key issue for high streets up and down the country—and £1.4 billion could go a very long way towards helping all shops, not just a few that specialise in this one area. Lots of different things could be done with £1.4 billion. It really is a huge sum of money, and giving tax breaks like this is not an efficient way of using it; we can do far more good with it in other ways.

Secondly, as I said, I do not support the scheme because it is not fair. It has always struck me as quite bizarre that wealthy visitors coming to Scotland to buy jewellery or coats, or coming to central London to buy computers, do not have to pay tax while British people buying the same goods do have to pay it. Why should wealthy travellers get a 20% tax break? They are using the resources and infrastructure in the UK just as much as anyone else. If I go to some other country, I certainly do not expect tax breaks on buying expensive goods there. I think it is inexplicable to most British people that the taxes they have to pay are used to subsidise such tax breaks. It is particularly ironic that the Scottish National party and Labour are opposed to this. They are meant to be the parties of tax breaks for the many, not the few; here, they have become the parties of tax breaks for the few wealthy people. For all those reasons, I totally support the scrapping of the retail export scheme.