Chancellor faces backlash over ‘vacation tax’ as 200 high companies demand pay-per-night customer levy is scrapped

Rachel Reeves was facing a major backlash last night over a proposed ‘holiday tax’ that could see the price of a break rise by at least £100.

Around 200 top firms, including Haven, Butlin’s and Merlin Entertainments, which owns Legoland and the London Eye, have demanded the Chancellor scrap the ‘visitor levy’.

The Government is currently considering allowing local authorities in England to slap an extra nightly charge on paid for accommodation, such as hotels, holiday parks, B&Bs and AirBnBs.

But firms have warned Ms Reeves that families will be ‘hit hardest’ as well as put jobs at risk, drain money from local businesses and communities, and undermine the Government’s growth agenda.

A tax of £2 per person could add £112 to the bill for a family of four on a two-week summer holiday, UKHospitality, which organised the open letter, warned.

This will force families to shorten holidays, look abroad or not go on holiday at all, hospitality bosses added.

And it has raised concerns for coastal areas, where many people rely on tourists for jobs.

‘Fewer visitors mean fewer shifts, fewer jobs and fewer opportunities — particularly in the entry-level and return-to-work roles which the Government is rightly focused on,’ bosses said.

And lower spending will also have a knock-on impact at other local businesses, including restaurants, cafes, pubs, taxi firms and shops. ‘In many places, it is tourist spending which keeps high streets alive, supporting the small businesses that define our communities,’ the letter said.

‘Do not turn the Great British break into a luxury. Scrap the holiday tax and back the families, workers and the businesses who make England worth visiting,’ it said.

There are fears any new tax would also hit corporate clients travelling to hotels for conferences, meetings and to deliver services, who will pass on higher costs to their customers and push up inflation.

The letter has also been backed by Hilton, IHG Hotels & Resorts, Parkdean Resorts, Travelodge and Whitbread.

One of the signatories, Jo Boydell, chief executive of Travelodge, warned last month that Labour ‘does not understand the economic value’ delivered by the hotel sector.

It comes as holiday operators and hotels have been left reeling after being excluded from help introduced for pubs after the Chancellor’s botched hike to business rates.

Ms Reeves last month announced a 15 per cent discount on pubs’ bills after a furious reaction, which saw 1,500 publicans ban Labour MPs from their premises.

But the concession has left other hospitality businesses fuming ahead of steep increases.

The average business rates bill for hotels will increase by 115 per cent over the next three years, according to analysis by UK Hospitality.

That will add £205,200 to the typical bill – and makes the sector one of the hardest hit by changes.

Firms are also facing higher energy and wage bills as well as grappling with increases to National Insurance contributions introduced last April.