End the tourist tax now to avoid a summer washout

As high-spending Americans flee to Europe, London's business leaders are urging ministers to take action.

- By Jonathan Prynn

London business leaders have renewed their pleas for the Government to axe the so-called "tourist tax" ahead of a feared "summer of discontent" caused by higher taxes and lower numbers of US shoppers.

With the peak tourist season set to begin during the Easter bank holidays, London's retail and hospitality sectors are concerned that a painful shake-out is inevitable if ministers refuse to let foreign visitors reclaim the 20 per cent VAT they pay on goods here.

Employers are already grappling with the impact of increased National Insurance rates and lower thresholds that can add as much as £900 to the annual cost of hiring a member of staff. Businesses warn that they will be forced to lay off staff over the coming months to offset the higher costs, which took effect on April 6.

Now a new threat is looming. Travel bosses say the high-spending Americans that London relies on to keep its shops, restaurants, hotels and cabs full over the summer months appear to be booking fewer trips to the capital.

Americans appear to fear a less friendly welcome in Europe this year because of Donald Trump's tariffs and the criticism that his administration has directed to its "allies" across the Atlantic. There have been reports, for example, of embarrassed Americans wearing Canadian maple leaf badges while on holiday to disguise their national identity.