Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what consideration they have given to reinstating tax-free shopping for tourists, and what stage the review by the Office for Budget Responsibility has reached into the potential benefits of doing so.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The Government is welcoming industry submissions on the VAT Retail Export Scheme and the associated airside scheme (tax-free shopping). The Government will continue to accept representations and consider this new information carefully, alongside broader data.
The Office for Budget Responsibility (OBR) is independent. It has announced it is reviewing the costing of the abolition of tax-free shopping in 2020. The OBR has stated that it will aim to publish it’s conclusions alongside the Spring Budget.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what consideration they have given to reinstating VAT-free shopping for international visitors; and what assessment they have made of the impact that this would have on (1) tourism, (2) retail, (3) the hospitality sector, and (4) the overall economy.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Government analysis conducted in 2022 found that introducing a worldwide scheme could come at a fiscal cost of around £2 billion each year.
The government’s costings calculate the direct cost of the policy to the exchequer, taking into account behavioural effects. The wider economic impacts of the policy are considered by the OBR through the indirect effects process.
Asked by: Gregory Campbell (Democratic Unionist Party - East Londonderry)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of rules on duty-free shopping on demand for flights (a) to and (b) from EU destinations at airports in (i) Northern Ireland and (ii) the rest of the UK.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
The Government remains committed to supporting the travel and tourism industries. As part of our support for the aviation industry, the Government regularly reviews flight data and considers it as part of policy making.
From 1st January 2021, British passengers travelling to EU countries have been able to take advantage of duty-free shopping, bringing our approach to the EU in line with the rest of the world. Inbound personal allowances were also substantially increased.
The Government keeps all taxes under review as part of the tax policy making cycle and Budget process.
Asked by: Gregory Campbell (Democratic Unionist Party - East Londonderry)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it his policy to permit the sale of duty free goods to people on flights between Northern Ireland and EU airports.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
The Government is committed to preserving frictionless movement of people and goods between Northern Ireland and Ireland. This is important to communities across Northern Ireland and would otherwise undermine the Belfast Good Friday Agreement.
Enabling duty-free shopping between Northern Ireland and the EU (of which Ireland is a member) without also introducing border controls on the island of Ireland would lead to significant distortions of trade as well as a significant revenue loss for both UK and Ireland. This is because it would create a legal route for unlimited amounts of alcohol and tobacco to flow into the UK market duty-free.
Asked by: Baroness Doocey (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the behavioural changes of travellers as a result of the withdrawal of tax-free shopping for international visitors.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government’s assessment of the anticipated behavioural changes as a result of tax-free shopping (covering the VAT Retail Export Scheme and the airside scheme) was set out in the original policy costing note which can be found in the Policy costings document from November 2020 p42-43. The government followed the same methodology when calculating costings for the 2022 Growth Plan, which can be found in the Growth Plan documents paragraph 4.19 and Table 4.2 from September 2022.
Whilst there are no current plans to re-introduce tax-free shopping for international visitors, the government keeps all tax policy under review, and we are very grateful to industry for their contribution to our invitation to provide evidence on this matter.
Asked by: Jim Shannon (Democratic Unionist Party - Strangford)
Question to the Northern Ireland Office:
To ask the Secretary of State for Northern Ireland, what assessment the Government has made of the potential implications for its policies of differences between duty free arrangements for people in (a) England, Scotland and Wales and (b) Northern Ireland.
Answered by Steve Baker - Minister of State (Northern Ireland Office)
The Government is committed to preserving frictionless movement of people and goods between Northern Ireland and Ireland, which is a member of the EU.
Allowing duty-free shopping between the two would require introducing border controls between Northern Ireland and Ireland which risks undermining the Belfast/Good Friday Agreement. It could also lead to significant revenue loss for both the UK and the EU.
Airports in Great Britain have extended duty-free shopping to EU destinations. However, to do so in Northern Ireland would allow goods such as alcohol and cigarettes to be bought duty-free in Northern Ireland and then sold in Ireland, or brought overland to Northern Ireland without paying duties.
Asked by: Wera Hobhouse (Liberal Democrat - Bath)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what fiscal steps he is taking to reduce emissions from the aviation sector.
Answered by Gareth Davies - Exchequer Secretary (HM Treasury)
The Government has introduced several fiscal measures to reduce emissions from the aviation sector. The aviation sector is subject to a carbon price via the Emissions Trading Scheme, meaning that airline operators must pay for each tonne of carbon that they emit. Some airline operators in the scheme receive free allowances which reduces their exposure to the carbon price. Following a consultation last year, the UK ETS Authority has announced its decision to phase out free allocation for domestic aviation by 2026.
Air Passenger Duty (APD) is the principal tax on the aviation sector. It is expected to raise £3.8 billion in 2023-24 and the primary objective of the tax is to ensure that airlines make a fair contribution to the public finances. The banding structure for distance ensures that those who travel furthest, and thus have a greater impact on the environment, incur a greater tax liability.
Further, the Government has committed £685 million to the Aerospace Technology Institute over this Spending Review period to help drive the development of more carbon efficient and zero-emission aircraft. At the Spending Review the Government also guaranteed funding for the Aerospace Technology Institute to 2031. Plus, £165 million has been allocated to directly support the production of more sustainable aviation fuels in the UK.
Asked by: Lord Rogan (Ulster Unionist Party - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Baroness Penn on 12 July (HL9073), how enabling duty-free shopping between Northern Ireland and the EU would "undermine frictionless trade with the EU"; and why this is not the case in relation to trade between Great Britain and the EU.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Introducing duty free shopping between Northern Ireland and the EU (which includes the Republic of Ireland) would require implementing allowances for the movement of these goods, to stop the uncontrolled flow of tax-free goods into either Northern Ireland or the EU (including the Republic of Ireland). These allowances would require enforcement. Therefore, if this were to be implemented, controls on the movement of goods between NI and the Republic of Ireland would be required, contravening the shared ambitions of the UK, Ireland and the EU.
By contrast, the movement of goods between the EU and Great Britain is subject to full third-country controls. This enables the enforcement of allowances for duty-free goods for passengers travelling into and out of Great Britain.
Asked by: Baroness Hoey (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Baroness Penn (HL5751), for what reasons they consider that introducing duty free at airports in Northern Ireland for passengers flying to the EU would undermine their commitment to maintaining frictionless trade.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Introducing duty free shopping between Northern Ireland and the EU (which includes the Republic of Ireland) would require implementing allowances for the movement of these goods, to stop the uncontrolled flow of tax-free goods into either Northern Ireland or the EU (including the Republic of Ireland). These allowances would require enforcement. Therefore, if this were to be implemented, controls on the movement of goods between NI and the Republic of Ireland would be required, contravening the shared ambitions of the UK, Ireland and the EU.
Asked by: Baroness Hoey (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answer by Baroness Vere of Norbiton on 3 July (HL8800), why airports in Northern Ireland are not able to avail of the duty free sales for passengers travelling to the EU now available at all airports in England, Wales and Scotland.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Northern Ireland enjoys frictionless trade with both the rest of the United Kingdom and the EU – the Government is committed to ensuring that remains the case.
Enabling duty-free shopping between Northern Ireland and the EU would undermine frictionless trade with the EU.