Hotels housing migrants will be exempt from a new 'overnight visitor levy' imposed on hospitality venues in England, a decision that has ignited anger among industry leaders and opposition parties. The exemption applies to taxpayer-funded accommodation for asylum seekers, which the government classifies as 'temporary accommodation'.
Prime Minister Rishi Sunak recently granted regional mayors the authority to implement an uncapped 'overnight visitor levy' on stays in hotels, bed and breakfasts, and holiday lets. While many Labour-led areas are expected to set the tax at 5 percent, the exemption for migrant hotels has been labeled "utterly outrageous" by Conservative critics.
"It is utterly outrageous that families saving up for a break and struggling hospitality businesses will be hit with another tax, while hotels being used to accommodate illegal immigrants are exempt," said Chris Philp, the shadow home secretary. He argued that British taxpayers should not be subjected to additional taxes while asylum hotels receive special treatment and called for the deportation of illegal immigrants to end the practice of using hotels for housing them.
Industry groups have expressed fury over the exemption, with some suggesting it could incentivize hotels to prioritize accommodating asylum seekers over paying guests. The hospitality sector has warned that the levy, if fully implemented, could result in significant economic losses, job cuts, and reduced tourism spending. Oxford Economics projections suggest that a 5 percent levy could lead to an estimated £1.8 billion cut in tourism spending, 33,000 job losses, and a £688 million reduction in Treasury tax receipts by 2030.
"Imposing an uncapped visitor levy in England is a kick in the teeth for the hospitality industry, at a time when small businesses are dealing with a deluge of cost rises," stated Tina McKenzie, national chairman of the Federation of Small Businesses. Allen Simpson, chief executive of the UK Hospitality trade body, noted that UK holidays are already more expensive than in many other countries due to a high VAT rate and that tourism taxes in major European cities are typically capped.
Andy Burnham, the Greater Manchester mayor, previously introduced a city visitor charge in his region, and other mayors have implemented similar levies. However, the government's recent move empowers 14 regional mayors across England to introduce these uncapped charges, with plans to extend the power to areas without mayors following local government reorganizations.
A government spokesperson stated that the policy is based on the principle of trusting local leaders to make decisions for their areas and shifting power away from Whitehall. Communities Secretary Angela Rayner suggested the levy offers an opportunity for areas to celebrate tourism and reinvest the revenue locally. The Department for Housing, Communities and Local Government has been approached for comment on the matter.