Ministers are preparing to roll out plans for a tourist tax across England, a move that has ignited concerns about potential job losses within the hospitality sector. The proposed legislation will grant mayors and other local leaders the authority to impose charges on accommodation.
While initially a flat fee was considered, the current proposals suggest the tax could be structured as a percentage of the cost of overnight stays, with no upper limit. This could significantly increase the expense of holidays in the UK, with industry representatives warning that tens of thousands of jobs in hospitality could be at risk.
Angela Rayner is expected to provide further details on the proposals at a forthcoming meeting with mayors. The concept of a tourist tax was first introduced under Keir Starmer, drawing parallels to similar schemes already in place in Scotland and Wales.
The current plans appear to have been expanded by Andy Burnham, who previously served as the mayor of Manchester. Charges akin to this already exist in various European countries, with the generated revenue typically allocated to fund local services. Under the proposed English system, mayors would have the discretion to decide how these funds are utilized.
Burnham implemented a City Visitor Charge in Manchester in April 2023, set at £1 per room per night. In London, estimates suggest that a 3 percent levy, as floated by Lord Khan, could generate approximately £350 million annually. Lord Khan has expressed support for such a measure in the capital.
However, not all local leaders are in favor. Tory Tees Valley mayor Lord Houchen has explicitly rejected the concept of a tourist tax.
Representatives from the tourism industry have voiced apprehension regarding the potential impact of the levy. Allen Simpson, chief executive of UK Hospitality, informed BBC Radio 4's Today programme that a new tourism tax in Edinburgh is already demonstrating "damaging effects." Simpson highlighted that holidays in the UK are perceived as more expensive due to existing higher VAT rates, even before any additional tourist tax is applied.
"What we're talking about here is an open-ended power for mayors to set tourism taxes at any level they want," Simpson stated. He contrasted this with existing taxes in European cities like Paris, Rome, and Berlin, where such charges are typically capped. Simpson warned that individuals employed in communities heavily reliant on tourism and hospitality could face job insecurity. "It will be the case that you'll have holiday parks which can't open in the shoulder seasons and of course people who go on holiday will just have that little bit less money in their pocket," he added.
A government source suggested that mayors are unlikely to implement excessively high charges, aiming to protect the local tourism industry, with most indicating a figure in the low single-digit percentage range. The source emphasized, "We have always been clear that while central government will set the framework for this power, it will be up to local leaders and local voters to decide what is right for their area."