Duty free sales across Europe will end at midnight tonight, marking the end of a 52-year tradition of cheap shopping for air and sea travellers, which first began in Ireland. Groups who have campaigned for the retention of duty free say its demise will lead to higher transport costs and job losses. Excise duty and VAT will be imposed from midnight on a range of products, including alcohol and tobacco.
The decision to abolish duty free was taken by EU Finance Ministers in 1991,on the grounds that differences in prices were an anomaly in a single market. The long reprieve until midnight tonight was given to allow the duty free industry time to adjust. Today, ferry ports and airports are bracing themselves for a flood of passengers out to grab the last bargains in duty free sales. Across Europe, the AA is warning of traffic chaos at some ports as ferry companies reported full bookings on today’s sailings.
The concept of Duty free began in Shannon in 1947, when it became the first airport in the world to exploit the idea of selling drink and cigarettes without government taxes. Over the years the idea took off with tax-free status being extended to a wide range of goods and gifts. However with the EU open market, and the harmonisation of duty and taxes at all EU borders, the idea of duty free has become redundant.
A Europe-wide campaign to retain duty free, a campaign in which Ireland was particularly vocal, failed. Groups in support of duty free put jobs losses in Europe at around 140,000, however the European Commission has said it would be half that. In Ireland, the worst affected airport will be Cork with 90% of its duty free business being hit. Shannon and Dublin are less affected because of their strong transatlantic business. It is hoped that many permanent staff can be re-deployed in new sky shopping concepts, but hundreds of seasonal jobs will go.
Duty Free accounts for £30million of Aer Rianta's profits, and airport and ferry companies will have to make up for those profits somewhere else. The loss of duty free will almost certainly mean increased transport costs right across Europe. From tomorrow, the cost of cigarettes and alcohol in airports is likely to double for passengers travelling within the EU. In Aer Rianta's Airports the prices on non-excisable goods, such as beauty products and electrical items, will remain the same, as VAT on these items will be absorbed by the airports. The duty free signs will not be coming down however, as travellers to non-EU countries will still be able to avail of the travel perk.
