As Westminster’s hospitality industry continues its uphill recovery, a new threat looms on the horizon: the Government’s proposed tourist tax. Presented as a practical fiscal measure, this levy risks creating far-reaching consequences for Westminster’s businesses at the worst possible moment.
At Westminster Business Council, we’re keenly aware of what our members are facing as we receive feedback from our new Hospitality Network. Thousands of hospitality operators across the capital are still battling the aftermath of the pandemic, contending with soaring costs, staffing shortages, and rising operational pressures. Adding a tourist tax on top of that would compound those burdens.
“Our members are already contending with a perfect storm of rising costs, staffing challenges, and the long tail of the pandemic,” says Sophie Shrubsole, CEO of Westminster Business Council.
“To impose a tourist tax now, especially following the damaging removal of VAT‑free shopping, sends a message that London is no longer a welcoming place for international visitors or business.”
The removal of VAT‑free shopping is estimated to have cost the UK economy £4.3 billion.* Although the scheme was abolished in 2021, the economic consequences are still unfolding.
“This isn’t just a number on a balance sheet. It’s about perception and competitiveness. A tourist tax chips away at London’s reputation as a world‑leading destination. And when reputation suffers, so does footfall, spending, and jobs,” adds Shrubsole.
It’s not only international visitors who will feel the impact. As businesses pass on rising costs, domestic tourists, local consumers and even our own members who are running face-to-face events will also face steeper prices. This is overburdening an already fragile industry that depends heavily on local demand.
“We cannot afford to alienate either group,” Shrubsole continues. “Our hospitality sector relies on local support just as much as it does on global visitors. Another tax burden is the last thing this industry needs right now.”
Westminster Business Council represents businesses across the capital and is urging policymakers to step back and engage with the private sector on more growth-oriented solutions. Through our sector working groups and partnerships with local authorities, we are advocating for revenue-generating strategies that boost footfall, spending and long-term resilience, instead of penalising it.
“This is a chance to rethink,” says Shrubsole. “We urge government to engage with industry to find smarter, more sustainable ways to support the economy. Ones that enhance, not hinder, London’s status as a global hub.”
At a time when London should be reinforcing its role as a vibrant, open and future-facing capital, the introduction of any policy that suppresses enterprise risks setting the wrong tone. Westminster Business Council remains committed to ensuring its members and the sectors they power are heard at the highest levels.
*https://www.thenationalnews.com/news/uk/2025/01/20/tourists-deterred-from-visiting-uk-by-high-taxes-and-lack-of-investment/
