Hospitality sector blasts Burnham’s uncapped tourist tax
The hospitality sector has blasted proposals from Andy Burnham’s government to introduce a fresh tax on tourists.
The industry has been left reeling after the government confirmed a new overnight levy on tourists that will have no upper cap.
Regional authorities are set to be handed the power to introduce a levy to support regional growth strategies and the visitor economy, according to a new government document.
A spokesperson for Number 10 said: “The fundamental principle behind this is that we trust local leaders to make decisions for their areas. That’s why we’re shifting power out of Whitehall and giving communities more control.”
Housing secretary Angela Rayner will meet the nation’s mayors today at No 10 North as part of the new plans.
The levy will be charged as a percentage of the cost of accommodation, rather than as a flat fee, which the government has argued will protect budget holidays. In a similar vein to the model in Scotland, there is set to be no upper limit on what can be charged.
Hospitality warns tourist tax could hit jobs
The move has quickly triggered backlash from businesses, after trade body UK Hospitality warned earlier this year such a tax raise would raise the cost of holidays as households continue to struggle with cost-of-living challenges.
“We are concerned by the prospect of an uncapped visitor levy at a time when the hospitality sector is already facing a significant tax burden,” Greg Hegarty, co-chief executive of PPHE Hotel Group, said.
“Hotels are dealing with substantially higher business rates and employment costs, while doing everything possible to remain competitive and minimise the impact on guests. Adding another tax on overnight stays risks making the UK a more expensive destination for both domestic and international visitors and could ultimately weaken demand and impact employment.”
Analysis by Oxford Economics, commissioned by UK Hospitality, modelled the impact of three different holiday taxes earlier this year – all of which were found to negatively impact jobs and spending.
Should the government opt for a five per cent levy on accommodation, Oxford Economics forecast that by 2030 as much as 33,000 jobs would be lost amid a £1.8bn drop in tourism spending. It added the levy would also reduce tax receipts to the Treasury by £688m.
“What we’re talking about here is an open-ended power for mayors to set tourism taxes at any level they want,” Allen Simpson, chief executive of UK Hospitality, told the Today Programme.
“Remember, if you go to Paris, if you go to Rome, if you go to Berlin, you’re paying a small tourism tax, but it’s capped. This one isn’t.”
During his tenure as Manchester Mayor, Burnham introduced a City Visitor Charge in April 2023 that charged a £1 per room per night fee to pay for measures aimed at attracting more visitors.
The mayor of London Sadiq Khan has also previously threw support behind a new levy.
“I think the Government should be looking at giving us the powers to have an accommodation levy. But my promise to the hotels and AirBnbs and so forth is the money would be used to improve the environment around that, to encourage more tourists,” he said at a City Hall event last year.
Shadow Chancellor Andrew Griffith said: “An unlimited tourist tax would be hugely limiting for the chances of the young people who might otherwise be employed in tourism and hospitality.”