Airport retailers urged to pass on £2.5bn-a-year VAT savings to passengers

UK airport-based retailers have been criticised for not passing on an average of £2.5bn (€3.4bn, $3.9bn) of value-added tax (VAT) savings every year to passengers travelling outside of the European Union. In duty-free shops at the airports, prices paid by the travellers are often the same as they pay on high streets.

While checking out, airport-based retailers demand that travellers show their boarding passes, which are scanned to establish if they are staying within the EU or travelling further afield internationally. By doing so, retailers make 20% on all purchases made to international flyers, without passing on the savings to the consumer.

Kabbee, London's minicab comparison and booking app, has launched a petition on Change.org, to encourage consumers to 'pass on' the 20% discount and urge retailers to change their behaviour. The firm estimates passengers' potential VAT savings at £2.5bn per year. After the VAT scam was exposed by the media, consumers have been refusing to give their boarding passes to retailers.

Of the 116.5 million people that fly to countries outside the EU from London airport every year, only 37% knew why they are required to show their boarding pass, when buying from duty-free shops, Kabbee said. In a survey conducted by the firm, a massive 72% of respondents are calling for airport retailers to introduce a two-tiered price structure for EU and non-EU travellers, while 28% said they were less bothered about the tax arrangements.

Kabbee noted that its petition aims at encouraging consumers to urge retailers to pass on the 20% saving, making travel a little bit more cost-effective.