The Government said it will give local leaders the power to impose a “modest charge” on visitors staying in hotels, bed and breakfasts, guest houses and holiday lets
Mayors will be given powers to impose a new tourist tax on overnight stays.
The Government said it will give local leaders the power to impose a “modest charge” on visitors staying in hotels, bed and breakfasts, guest houses and holiday lets. Similar rules exist in cities like New York, Paris and Milan.
The move, which will allow mayors to raise funds for local projects like transport and infrastructure, was welcomed by Greater Manchester’s Andy Burnham and Sir Sadiq Khan, the Mayor of London. But hospitality bosses branded it a “damaging holiday tax” and said it would be passed onto consumers.
It comes as Rachel Reeves prepares to lay out her highly anticipated Budget tomorrow, where she’ll outline plans for tax and spending as she battles to fill a black hole in the public finances.
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Local Government Secretary Steve Reed said: “Tourists travel from near and far to visit England’s brilliant cities and regions. We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.”
The move was welcome by regional leaders. Sir Sadiq said: “Giving mayors the powers to raise a tourist levy is great news for London. The extra funding will directly support London’s economy, and help cement our reputation as a global tourism and business destination.”
Mr Burnham said: “I’m proud that nearly two million people from all over the world choose to visit Greater Manchester every year. The money they spend contributes about £9 billion annually to our economy, supporting over 100,000 jobs.
“The levy will allow us to invest in the infrastructure these visitors need, like keeping our streets clean and enhancing our public transport system through later running buses and trams, making sure every experience is a positive and memorable one.”
But UKHospitality chief Kate Nicholls accused the Government of breaking its word with “a damaging holiday tax”.
She said: “This is a shocking U-turn that will only make life more expensive for working people. It could cost the public up to £518 million in additional tax when they travel in the UK and having knock-on impacts for the wider hospitality sector.
“It will effectively increase the rate of VAT to 27% for people who want to enjoy a holiday in the UK – making it one of the highest tax rates for consumers in Europe.
“Make no mistake – this cost will be passed directly onto consumers, drive inflation and undermine the Government’s aim to reduce the cost of living.”
A consultation on details of the measure will run until February 18.