THIEFROW REVISITED VAT a rip off
Posted on 08/21/2015 | About London, United Kingdom
It was way back in 1987 that London’s Heathrow Airport first earned itself the dubious nickname of “THIEFROW” when twenty-three British Airways baggage handlers were caught red-handed on concealed video cameras looting passenger bags.
At the time a police spokesman said, “The baggage area resembled a fitting room at a clothing store. Bags were being opened and clothes tried on for size: If they didn’t fit they’d put them back in the cases.” Fifteen of the ‘model employees’ ended up doing jail time. At the time police estimated that their BA sting was just the tip of the iceberg and that ‘pilferage’ - a cutesy word for ‘theft’ - at the nation’s airports almost certainly ran into the millions of pounds (sterling not weight) every year.
Well, almost thirty years later, last week’s headlines in the UK might demonstrate that in Britain’s airports old habits die hard. The big difference this time around being that the rip-offs have moved from the dimly lit seclusion of bag rooms to the bright lights of the duty free stores.
If you ever wondered in a UK duty free store why - even when buying something as innocuous as a newspaper – you’re always asked to show your boarding-pass, then wonder no more. Simply stated, you were being fleeced by the concession owners.
It just came to light that these merchants of everything from £1,000 Gucci handbags to £3 bags of Maynard’s Wine Gums (a particular favorite of mine) have been pocketing the cash that you didn’t have to pay in VAT (Value Added Tax): Passengers bound for destinations outside the EU are exempt from the UK’s 20 percent VAT, which maybe doesn’t amount to much on my bag of wine gums but sure makes for a tidy chunk of change on that other bag by Gucci!
A big part of the confusion – one that has been exploited for years it seems by airport vendors - lies in the public’s perception of “duty free goods” and the misnomer of a “duty free shopping area”. Certainly in the UK, “duty” is only applicable to cigarettes and alcohol. With everything else the best travellers can hope for is “tax-free” purchase opportunities, even though the prices offered may be almost identical to main street levels.
As was highlighted in an investigation by The Independent, this turns the sale of booze to non-EU travellers into a huge profit bonanza. For example, by failing to pass along a combination of VAT and alcohol specific duty charges on the sale of a £16.49 bottle of Absolut Vodka, the vendor will yield a profit of almost £9.00! I guess that’s what’s called an absolute rip-off!
Still confused? Another example would be if you purchase a £6.00 pair of Union Jack socks at LHR and your boarding-pass shows you’re headed for Toronto, the retailer doesn’t have to pass on to the government the £1.00 VAT you have paid. Instead of kicking that back to the purchaser, the retailer simply uses that pound to boost their profits.
One opinion is that, rather than a grand conspiracy to defraud the innocent traveller, the consumer is simply getting caught in the high-cost crossfire of airport concession rental rates.
The fact of the matter is that with airports all around the world doing double-duty as giant shopping malls, they rely heavily on the revenues derived from their retail concessionaires. At last count for example LHR had 345 concession holders that last year paid a total of almost £400 million in rent. That translates to an average per retailer of around £1.2 million a year in rent, or expressed differently, about CAD $6,500 a day! It takes a lot of socks and wine gums to cover such a princely sum.
Since the whole messy business was exposed in the press last week it seems there has been a revolution in the aisles of the UK’s duty free emporiums with thousands of passengers boldly but politely refusing to show their boarding passes when asked.
And as only a true Brit could put it, Martin Lewis founder of MoneySavingExpert.com said, “You’re not protecting the sanctity of Britain by giving them your boarding pass. Just say, No sorry, I’m not going to give it to you unless you pass the reduction on to me.”
Ah yes, the spirit of Sir Winston lives on. “We will fight them on the beaches, we will fight them at the duty free check-out!”