Mayors in England granted power to impose tourist tax
North East mixed on new powers for visitor levy
Mayors in England will soon have the power to impose a tourist tax on visitors staying in hotels, bed and breakfasts, guest houses, and holiday lets, to help fund local projects.
The measure, announced ahead of today's Budget, aims to generate additional funds from visitors to be reinvested into the local area, predominantly in transport infrastructure and the visitor economy, according to the Ministry of Housing, Communities and Local Government.
"This new power allows mayors to support their regions and keep driving growth," Local Government Secretary Steve Reed said, adding that English cities would align with global tourism destinations like New York, Paris, and Milan, where similar levies are already in place.
Reaction from regional leaders
London Mayor Sir Sadiq Khan and Greater Manchester Mayor Andy Burnham expressed support for the proposal, pointing to the potential economic benefits.
Sir Sadiq said the extra funding would help cement London's reputation as a global tourism hub, while Mr Burnham emphasised the potential impact on improving infrastructure and experiences for Greater Manchester’s yearly visitors.
However, Lord Houchen, Conservative mayor of Tees Valley, has opted out, stating he will not use the new powers.
“There will be no tourist tax in Teesside, Darlington and Hartlepool for as long as I’m mayor. Thanks, but no thanks," Lord Houchen said.
Industry concerns
The hospitality industry has criticised the measure, warning it could lead to higher costs for consumers.
Kate Nicholls, chairwoman of UKHospitality, called the levy a "damaging holiday tax." She said: "Make no mistake – this cost will be passed directly on to consumers, drive inflation and undermine the Government’s aim to reduce the cost of living."
Next steps
The plans, announced by local government minister Miatta Fahnbulleh in Parliament on 14th November, will be subject to a consultation period lasting until 18th February 2024.
The consultation will explore aspects of the levy, including whether it should have a cap on its size. Proposals to potentially extend these powers to local councils without mayors will also be considered.
Shadow local government secretary Sir James Cleverly criticised the plans, describing them as "another Labour tax on British holidays" and questioned its necessity given existing mechanisms like business improvement districts.
The Government has yet to confirm how revenues from the tourist tax will be distributed among local councils, but Westminster Council leader Adam Hug has stressed the need for revenue sharing to avoid impacting economic growth.