The introduction of overnight visitor levies in England is set to cost the UK's tourism industry £6 billion, with a potential reduction of 19.5 million domestic overnight visits, according to estimates from the Taxpayers' Alliance. This alarming figure comes as mayors across England are granted authority to impose visitor levies on hotels, guesthouses, and holiday lets, sparking concerns that the sector will be suffocated by excessive taxation.
Currently worth £147 billion annually to the British economy, the tourism industry has been viewed as a key driver of growth. However, proponents of the new tax argue that it is essential for ensuring visitors contribute to local services. But critics, including Anne Strickland from the Taxpayers' Alliance, counter that tourists are unlikely to utilise major public services like the NHS or social care and that the industry already generated £52 billion in tax revenue last year.
Analysis by the Tourism Alliance reveals that UK accommodation is already heavily taxed compared to almost all comparable destinations studied. In fact, when factoring in VAT on overnight stays, Britain ranks alongside Amsterdam as one of the most highly-taxed nations. However, unlike Amsterdam's tourist tax, which aims to manage overtourism, the UK's proposed levy is not designed to tackle this issue.
Industry leaders are warning that if the UK becomes too expensive for visitors, they will simply choose other destinations, leaving the sector vulnerable to financial pressures. These pressures already include rising Air Passenger Duty and the 2021 removal of tax-free shopping for overseas visitors. Furthermore, the hospitality industry is adapting to the new Employment Rights Act, which will impact its reliance on flexible and seasonal labour.
Experts suggest that Britain cannot afford to deter visitors, given its declining global market share in tourism over the past three decades. The proposed levy adds to a series of increasing financial pressures on the tourism sector, with both the Mayor of London and the likely next Prime Minister reportedly supportive of these new powers.