Cornwall vacationer tax will ‘choke’ small enterprise already on the brink over Labour fee hikes – with holidaymakers dealing with shut-down lodges and closed eating places

British staycationers heading for Cornwall should expect more boarded up businesses in future, say those working in the region’s hospitality industry, if plans for Chancellor Rachel Reeves‘ ‘holiday tax’ are allowed to go ahead. 

Under the government’s proposals, city mayors and town officials will be allowed to raise funds through a levy on overnight stays at hotels, holiday lets, B&Bs and guesthouses, regardless of size or price.

However small business owners in Cornwall say the holiday tax – which could add £100 onto a two-week family stay – is likely to be absorbed by owners, who won’t want to pass on the charge to customers already struggling to afford getaways.

Despite being one of England’s most visited regions – blessed with beautiful beaches, tropical gardens and major attractions including the Eden Project – Cornwall has seen its lucrative tourism industry suffer since lockdown. 

In the autumn, the official tourist board, Visit Cornwall, entered voluntary liquidation, saying it faced ‘insurmountable financial problems’ – and visitor numbers slumped by 12 per cent in 2024 before rising slightly last year. 

Skyrocketing rates, which began in Chancellor Rachel Reeves’s October budget, have left many small businesses in the industry on the brink, with the holiday tax potentially the ‘nail in the coffin’ for those whose livelihoods depend on the busy summer season. 

Labour increased the national living wage for those aged 21 and over to £12.71 an hour this month – a 4.1 per cent rise, with rises in the minimum wage, national insurance contributions and the introduction of pension auto-enrolment leaving many Cornish business owners in fear of insolvency.

Vanessa Clark, 52, who runs a restaurant, Indidog, in Falmouth says the tourist tax, which could be introduced next year, will put small companies trying to stay afloat in the aftermath of the rate hikes backed into a corner.

She told the Daily Mail: ‘It’s disgraceful. They’re [the Government] expecting accommodation providers to collect that tax but it will end up being absorbed by them.’

Clark says hotels and B&Bs desperate for tourists, who are currently being hit by increased fuel prices and rising inflation, will feel compelled to soak up the tax as an incentive for visitors to make the long drive west.     

‘They’ll use it to try and draw people to them, saying: “We’ll sort the tax out if you stay with us”, so that will get absorbed, along with Booking.com’s [commission fee] 18%. Basically, small business is just being choked.’

The restauranteur cites the example of a luxury hotel in Polzeath that is footing the bill for guests’ petrol this summer – to ease the burden of rising costs.

The St Moritz Hotel and Cowshed Spa, owned by brothers Hugh and Steve Ridgway since 2004, is offering to fund fuel costs for tourists to persuade them to make the journey to Cornwall. 

‘Petrol prices are averaging about 15 per cent up, diesel about 20 per cent up. So, we just divided up the country based on postcodes. 

‘We have to be very innovative, very deft of foot in the hospitality industry at the moment, because the government is just making life so difficult for us,’ Hugh Ridgway told the Daily Mail last week.   

In February, four pubs, including The Golden Lion in Port Isaac which has appeared in TV show Doc Martin, closed on the same day.

The Pityme Inn at St Minver, The London Inn in Padstow and The Lugger Inn in Polruan, all part of The Cornish Inns group, were shut suddenly after the company’s co-director Jason Black said there was ‘simply not enough capital left to continue safely and responsibly’.

A month later, it was announced on Facebook that the pubs would re-open.  

In March, trendy Falmouth restaurant Hevva!, with top chef Will Johnson at the helm, announced it was closing its doors just weeks after being listed in the 2026 Michelin Guide.

While Johnson told customers on Instagram ‘opportunities too good to pass up’ in London had contributed to the closure of the popular restaurant, he acknowledged that ‘times are tough for restaurants, and they’re getting tougher.’ 

Joby Godolphin, who is the owner of B&B Storm in a Tea Cup in St Ives, Cornwall, said the holiday tax is ‘ridiculous’ and ‘should not be happening’.

The 49-year-old businessowner said: ‘Tourism tax is a nail in the coffin because the last thing we need is people feeling like they are being taken the mick.’ 

Mr Godolphin, who was born in St Ives, said visitors should be able to travel to the ‘free, beautiful place’ of Cornwall without the added costs. 

He added: ‘It’s ridiculous, the tax shouldn’t be happening they should be looking elsewhere. All you are doing is adding more charges to people. 

‘All they want to do is come travelling and have a good time. I don’t think there should be any tax – it is a visible way to shoot the golden goose.’  

The planned tourism levy is already in place in Manchester, where tourists are charged £1 plus VAT per room, per night. 

A spokesperson for the Government previously said the exact design for a tourism tax ‘has not been decided’ and explained how it will help areas ‘benefit from tourism’ as well as give mayors more cash to ‘invest in local priorities’. 

The Treasury has been contacted for comment. 

Complaints from locals about overtourism have also hit hospitality owners where it hurts in the picturesque region in recent years. 

In 2022, the head of now-defunct tourist organisation Visit Cornwall, Malcolm Bell, said the region only wanted ‘certain types’ of holidaymakers. 

He told Cornwall Live at the time: ‘You have friends, then you have guests, then you have tourists, then you have bloody tourists, then you have f***ing emmets. You can quote me on that.’

Emmets is the Cornish word for ants – and slang for tourists. The term has also been spotted daubed on road signs across the holiday region – despite the industry contributing £2billion annually to the local economy.  

Hotelier Hugh Ridgway says Cornish residents should embrace the industry that aids the local economy. 

He said: ‘The only time that Cornwall has been oversubscribed was in 2022, when we unlocked from the pandemic but that was the first time ever.

‘There is a very vociferous, tiny minority talking about overtourism but they should be very, very careful about what they wish for, because we [the hospitality industry] are 20 per cent of the economy down here.

‘The tourism industry employs a lot of young people. We are the first port of call, we train them and inculcate a work ethos into them.

‘We’re a wonderful stepping stone to future employment. So, yes, people need to be careful what they wish for.’