Modelling by Oxford Economics, commissioned by UKHospitality, outlines the impact a holiday tax in England would have.
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According to the research, if the impact of the 5% levy is fully realised by 2030, it would result in a reduction in GDP of £2.2bn, a £1.6bn tax rise for holidaymakers, cost £688m in reduced tax receipts to the Treasury alongside a £101m loss in direct investment from hospitality and tourism businesses.
It called on the Government to stop the holiday tax as well as urging consumers and holidaymakers to write to their MP and oppose the tax.
No winners
UKH chief executive Allen Simpson said: “The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism.
“There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs and taxi firms, the impacts are stark and indiscriminate.
“Taxes up, jobs lost and our high streets hit once again. Holidays are for relaxing, not taxing. The Government should keep it that way and stop the holiday tax.”
Oxford Economics modelling considered three scenarios - a 5% levy on accommodation, a £2 levy per person per night and a £2 levy per room per night.
All three result in a drop in GDP, tourism spending, nights spent in accommodation and total jobs.
Clear economic impact
Oxford Economics Matthew Dass said: “Our modelling shows introducing a holiday tax would have a clear economic impact.
“Across the wider economy, the policy is likely to have negative consequences. The additional revenue generated by the tax will be outweighed by reduced economic activity, as higher costs dampen tourism demand, ultimately leading to a loss in GDP.
“With England already operating at the upper end of VAT rates, ad additional tax would further weaken the country’s competitiveness relative to other destinations and place additional pressure on consumers.”
In February, UKH raised concerns about the timing and impact of plans to introduce overnight visitor levies in England.
In response to proposals, the trade body said it was the “wrong policy at the worst time”.
