No one likes paying tax and while it is true some are punitive with limited money-raising potential it is unfair to say that all are bad.
Take tourism taxes or visitor levies. The news that the UK government is to allow English mayors to introduce a charge for overnight stays has met with mixed reaction from the industry
"The announcement that regional mayors could introduce a levy on overnight stays will cause serious concern across England’s visitor economy,” said Joss Croft, CEO, UKinbound.
The reasons for coming out against the measure include:
- Other fees paid by visitors e.g. visa charges and air passenger duty
- Administrative burden on hotels and local authorities
"If government proceeds, any scheme must be simple, fixed-rate and low-cost, protect small businesses, administered by local authorities rather than individual operators, and all revenue must be ring-fenced for reinvestment directly into the visitor economy. A full economic impact assessment is essential before any powers are introduced to avoid unintended consequences and further damage to our visitor economy,” Croft added.
Elsewhere, Ed Bignold, managing director and global co-lead for travel, hospitality and leisure at A&M, said: “There is plenty of precedent for tourist levies across Europe and beyond, and in most markets the cost has ultimately been passed on to guests. The difference this time is timing. When other countries introduced similar measures, operators were working in an environment where they could more easily pass through rising inflationary costs. That is proving much harder now, with margins already under strain and consumers increasingly price sensitive. History, in this case, may not be a good indicator of the future impact.”
Valid concerns?
I’m struggling to think of a business or lobby group that has welcomed a new tax and in a lot of cases their opposition is simply reflexive.
However in the case of the UK hospitality industry it’s worth remembering what a torrid few years it has had since Covid with increasing staff costs, high business rates and rising energy costs.
That said there is no reason to think that making tourists pay a small amount extra each night will impact visitor numbers. The travel industry continues to grow and tourists are seemingly impervious to the extra costs associated with flying and overnight accommodation. Moreover it has had close to zero impact in the European cities where it is now an expected fact of life and has even raised millions of Euros in extra revenues.
This leads on to the second point which is the potential benefit for local authorities and local people this will bring. While overtourism hasn’t been much of an issue in the UK it is not inconceivable the local resentment could boil up in small cities with outsized visitor numbers. Linking funds brought in from tourism to local residents through a money-raising scheme could help create a more balanced situation.