Following speculation about the potential introduction of a tourist tax, trade body UKHospitality (UKH) chief executive Kate Nicholls has warned Chancellor Rachel Reeves the move would have a “dire impact” on tourism across the nation.
She said: “The idea that a tourist tax would fix the public finances is completely misguided and would only serve to inflict damage on the UK’s tourism and hospitality sectors.
“The UK already ranks incredibly poorly when it comes to our tourism competitiveness, due to our high rate of VAT.
“This is in comparison to our European competitors, many of which have VAT set at around half our 20% rate, and a tourist tax will only make us less attractive to visitors.
Lose-lose situation
“An additional charge would not only put off overseas visitors but also disincentives' Brits from taking breaks in the UK – it would be a true lose-lose for businesses, the economy and consumers.”
The proposed levy could potentially raise more than £1bn for the economy annually, according to reports.
However, Nicholls cautioned the rumoured tax would result in “unsustainable” additional costs for hospitality firms.
She continued: “The potential estimated cost of a tourist tax, if inflicted on hospitality businesses, would push the additional costs they’re facing north of £4bn. That’s simply unsustainable.
“I sincerely hope a tourist tax is not being seriously considered by the Government. That is why I’m writing to all MPs today on this issue and I would urge them to engage with us to understand the damaging impacts it could have on a sector that generates £140bn for the economy each year.”
Additional costs
Last week, UKH Scotland called for the Edinburgh tourist tax to be kept to a “minimum” after Edinburgh City Council announced it would agree on a visitor levy fee later this month.
Two meetings are set to take place where city councillors will decide whether to support the levy, which will be set at 5% of accommodation costs.
If agreed, the tax will start being applied to bookings made on and after 1 May 2025 to stay in overnight accommodation in the city on and after 24 July 2026.
The council predicted the levy is expected to raise up to £50m a year.
UKH Scotland executive director Leon Thompson said: “I would urge councillors to understand the rate cannot be punitive and to be mindful of the impact any additional costs will have on businesses and visitors.”
