Tourist taxes proposed again in England, Scotland and Wales
In recent months the idea of a tourist tax – a nightly charge levied on overnight visitors – has been proposed across the UK, threatening to impose further taxation on tourism businesses on top of their already burdensome levels of VAT and business rates. Local authorities in Wales, Edinburgh, Bath, Oxford, Birmingham, and Hull local authorities have all proposed filling budgeting gaps by charging tourists – domestic and foreign alike.
This fundamentally regressive form of taxation will increase prices across the board for visitors and discourage longer stays that provide greater benefit for the local economy than day visitors. For every £1 spent directly in the hospitality and tourism industry, on average, a further 50p is spent in the local economy, and threatening the already great contribution of the industry to local areas is nonsensical.
To countenance an increase in taxes on tourism businesses when the rate of VAT on tourism remains one of the highest in Europe is inconceivable. For the moment, the progress of these taxes has been slowed in the devolved authorities with the Scottish government ruling out granting Edinburgh the power to raise this tax, and the Welsh government choosing not to institute a nationwide levy.
However, whilst the Welsh government has not chosen to impose a tourist tax across Wales, they left open the possibility of allowing individual local authorities impose taxes of this kind.
In England, whilst local authorities do not have the power to impose their own new taxes, they regularly propose the idea. The power to introduce new taxation is held by central government, and while there has been no indication that they will devolve the requisite power, there has nevertheless been no outright rejection of these proposals.
Recent media reports have suggested that a tourist tax would be used as part of a funding package to for the Commonwealth Games in Birmingham. The Treasury has refuted the claim that a tourist tax has been accepted as part of the funding model, but added that a review of possible funding streams would be considered in a budget review for the games by the Treasury.
The Campaign to Cut Tourism VAT is resolutely opposed to these proposals, and believe that a reduction in the tax burden on tourism businesses is the way to achieve their full potential, and will continue to oppose these taxes while also advocating a reduction of Tourism VAT.
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