UK Hospitality has sent a letter to the Prime Minister warning that the government's overnight visitor levy could cost an estimated 33,000 jobs in the UK's tourism sector. The trade body is urging Andy Burnham to drop the plan as part of his devolution push.
In the letter, obtained by City AM, UK Hospitality chief executive Allen Simpson told Burnham: "It's clear the government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost-of-living crisis." He added: "I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs."
The levy was first proposed under Keir Starmer's administration, aiming to give regional mayors the power to charge visitors for overnight stays. It has already drawn opposition from Premier Inn owner Whitbread, pub chain Greene King and seaside resort Butlins.
Devolution plans and government response
Burnham's "Rewiring the State" devolution initiative, unveiled last week, would pave the way for tourist tax powers to be extended to every strategic authority in the UK. The government intends to use revenue from the levy, combined with a share of local income tax receipts, to finance local infrastructure projects.
The government said: "Local leaders know what it will take to drive growth in their areas, creating jobs and attracting investment that speak to the strengths of their region."
However, UK Hospitality, which represents 130,000 British pubs, restaurants and hotels, has warned that the "politically toxic" visitor levy would burden holidaymakers with more than £1bn in tax.
'Holiday bonus' proposal
Simpson is asking Burnham to scrap the tax and instead introduce a "holiday bonus," which would return a share of tax revenues to local regions based on the number of tourists they attract. UKH said this would operate similarly to the Prime Minister's scheme to return part of income tax receipts to local authorities for transport and community projects.
Simpson told Burnham: "Under your leadership, hospitality can be included within the wider strategy of devolving revenues rather than creating new taxes." He continued: "With this proposal, mayors would be able to spend the funding on their regional priorities, but there would be a clear incentive to improve the local environment to encourage more overnight stays."
MPs urge review
Last week, a group of backbench MPs cautioned that the tourist tax could reduce tourism spending and threaten investment and employment in the hospitality sector. The All-Party Parliamentary Group for hospitality and tourism has called on the government to undertake a full review of the policy and engage meaningfully with industry leaders before proceeding.
Chris Webb MP, chair of the group, said: "This report makes clear the concerns that exist across the tourism and hospitality sectors about the potential impact of a visitor levy." He added: "If the Government chooses to proceed with the levy, it must be designed with fairness, consistency and genuine engagement with the industry."
