The Government’s ‘Rewiring the State’ policy paper, released last week, said every area in England should have a strategic authority in place by the end of 2028.
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The paper also set out plans to give all strategic authorities the ability to introduce an Overnight Visitor Levy, with local leaders able to set out how revenues would be invested by March 2028.
UKHospitality said the move would go beyond previous plans for mayoral authorities and risk making family holidays more expensive during a cost of living crisis.
It has written to the Prime Minister urging the Government to adopt a “holiday bonus” instead, which would devolve central Government revenues to local authorities based on the number of visitors they receive.
Tourism impact
UKHospitality said the alternative would incentivise tourism and support local economies, rather than adding costs for visitors.
The trade body warned a holiday tax could cost 33,000 jobs, reduce national GDP by £2.2bn and add £100 to the cost of a family of four going on holiday.
It said the impact would be felt across the visitor economy, including hotels, pubs, restaurants, cafés and local high streets that rely on tourism spend.
UKHospitality CEO Allen Simpson said: “As we warned would be the case, proposed holiday tax powers for mayors are being swiftly expanded to every strategic authority in England.
“It’s clear the Government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost of living crisis.
“I am pro devolution, but I am not in favour of an extra tax that will cost 33,000 jobs.”
Holiday bonus
Simpson said local areas should be rewarded for attracting visitors, rather than given powers to tax them.
He added: “The solution is simple. Treat hospitality the same as every other sector. Instead of devolving taxation powers, devolve central Government revenues to local authorities through a holiday bonus instead.
“Rewarding local authorities with fixed revenue per visitor night, for example, incentivises tourism and drives economic growth, rather than costing jobs, deterring visitors and making family holidays more expensive.
“The cost of lost VAT and increased benefits through reduced economic activity and employment will in many areas outweigh the revenues raised by a tax.
“A holiday bonus is the right kind of devolution: more revenue and control for local communities, without the lost jobs caused by a holiday tax.”
A UKHospitality poll of more than 10,000 people also found 56% opposed the tax, compared with 24% who supported it.
