Labour’s holiday tax ‘will make staycations more expensive’
A leading trade body has attacked the government’s plans to push through a so-called holiday tax, which it says will make Brits’ staycations more expensive.
Labour unveiled an Overnight Visitor Levy Bill as part of the King’s Speech, which provides the legislative framework for mayors to be handed the power to impose a tourism tax in their regions.
The exact structure of the tax has not yet been made clear.
Previous suggestions indicated that the levy could be either a five per cent rate or a £2 fee charged per person per night on top of accommodation.
The government is set to push through the tax despite furious opposition from opposition mayors and hospitality firms, who say the levy is “politically toxic”.
‘Shocking U-turn’
Leading trade body UK Hospitality had previously warned the tax could cost 33,000 jobs in the tourism sector and wipe £2bn off GDP.
The industry body claims the levy will hit working families the hardest and could add more than £100 to the cost of a two-week break.
Responding to the King’s Speech, UK Hospitality chief executive Allen Simpson said: “It’s a shocking U-turn after it told both the House of Commons and UK Hospitality that it would not implement a holiday tax.
“A holiday tax is wildly unpopular, as well as economically destructive. It is nonsensical for the Government to go ahead with such an unpopular measure.”
The government is due to respond to a consultation on the levy, and claims that mayors will be allowed to use the income from the tax to invest in local infrastructure.
John Dickie, chief of the lobby group BusinessLDN, said: “The decision to empower mayors to introduce visitor levies comes at a moment when the hotel and accommodation sector is facing a perfect storm with soaring costs and huge global uncertainty.
“Any new tax must reflect these challenges and be spent attracting more overseas visitors. The Government should also separately look again at the case for reintroducing VAT-free shopping for overseas visitors which would more than pay for itself and bolster the UK’s competitiveness.”
Cost of living blow
The boss of holiday resort titan Butlins, Jon Hendry Pickup, submitted to this consultation, opposing the tax.
He told CityAM following the King’s Speech: “It’s disappointing that the Government is pressing ahead despite how clear businesses, consumers and the hospitality sector have been about the potential consequences of a holiday tax.
“At a time when there’s a real opportunity to back UK staycations and regional growth, taxing people for a domestic break is not only another blow in terms of cost of living but also puts investment in local jobs, local businesses, and domestic tourism in England at risk.”
Labour mayors like Sadiq Khan in London and Steve Rotherham in Liverpool have backed the tax, while Reform UK’s Lincolnshire mayor Andrea Jenkyns and Tory mayor for Tees Valley Lord Houchen are opposed to the levy.
The tax has the potential to turn swathes of voters against Labour, according to polling by UK Hospitality which found that opposition to the levy outweighs the majorities of a host of cabinet members.
These include health secretary Wes Streeting, foreign secretary Yvette Cooper and environment secretary Emma Reynolds.