Tourism body says no to London bed tax
UKinbound says it will fight proposals backed by Mayor of London Sadiq Khan to tax tourists staying in the capital’s hotels.
The suggestion is one of the number of recommendations contained in a new report from the London Finance Commission that calls for further powers to be devolved to the capital in the aftermath of the decision to leave the European Union.
It said a tax of 5% of the nightly room rate would raise £240 million a year, which could be used to pay for public services.
Some of the money could be used by London boroughs for services such as street cleaning or to maintain free-to-enter cultural attractions, and some could be diverted to the tourism industry to pay for training, it said.
But UKinbound chief executive officer Deidre Wells said a bed tax would be a ‘retrograde step’ for UK tourism. "Every inbound tourist already contributes an additional £630 in export earnings and £216 to the Exchequer, and the UK has one of the most punitive tax systems for tourism in the world," she said.
"Inbound tourism generates over £22 billion for the UK economy making it our 7th biggest export earner and one of our largest employers. Councils across the country need to do all they can to encourage more tourists to visit their destinations, not see them as a cash cow.
"It is highly important that we send a welcoming message to tourists visiting our post-Brexit Britain. Introducing a bed tax will counteract the Government’s ambition of making us a truly tolerant and global nation."
Consultancy firm RSM warned that a tax on visitors could impose a burden on UK hotels, which already charge higher VAT than most other European countries.
Ian Bell, head of travel and tourism at RSM, said: "The proposal for a new tourism tax in London follows recent initiatives to introduce tourist taxes in other cities such as Edinburgh. If these proposals go ahead in the nations’ capitals, you can well imagine that other UK cities will want to follow suit as a means of boosting council coffers.
"The report argues that such a levy already operates in international cities such as Paris, Berlin, Rome and Amsterdam. That may be true, but it ignores the fact that UK hotels have to charge VAT at the full rate, while most EU member states apply it at the reduced rate. Arguably, this already puts UK hotels at a competitive disadvantage.
"In Ireland, the reduced VAT rate for the tourism industry has been so successful that it has been retained as part of the Irish Budget measures for at least a further year."
Ireland introduced a reduced VAT rate of 9% in 2011 and this has since been credited as creating an estimated 45,000 jobs.
"Before the government looks at the tourism tax proposal, it should perhaps first consider why the UK is not making greater use of the reduced rate band for the UK hotel, hospitality and leisure sectors," added Bell.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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