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Pass on sales tax savings to passengers, UK govt tells airport retailers

LONDON, Aug 12 (Reuters) - The British government has called on airport retailers to stop pocketing sales tax discounts meant for passengers after a newspaper investigation into the practice prompted a backlash from consumers.

Most airport retailers ask passengers to show their boarding cards at the checkout when paying for goods. While security is often cited as the reason, the Independent newspaper reported stores use the information to avoid paying the 20 percent Value Added Tax (VAT) on goods headed outside the European Union.

"The VAT relief at airports is intended to reduce prices for travellers, not as a windfall gain for shops," David Gauke, Financial Secretary to the Treasury, told the newspaper.

"While many retailers do pass this saving on to...