The UK Government's proposed Holiday Tax could cost about 33,000 jobs, according to Allen Simpson, Chief Executive of UKHospitality. Writing in an opinion piece, Simpson argued that the tax, which would add an average of £100-£150 to a family summer break in England by 2028, is the last thing the hospitality sector needs.
Tax burden on families
Simpson said the additional cost, which could be even higher in some tourist hotspots, is money that many families do not have. He noted that similar taxes are already underway in Wales and Scotland, and that the annual cost would be two or three times more than the temporary saving on energy bills announced by the Government in the summer.
While the Government says it is normal to charge such taxes, Simpson pointed out that taxes on holidays abroad are lower across the board. He cited that a hotel in Berlin currently has a 14.5% tax, whereas a hotel in Manchester could soon face a 27% tax. He argued this is unhelpful to family budgets and to young people hoping for summer jobs.
Job losses and opposition
Independent economic research suggests the Holiday Tax will cost about 33,000 jobs as people take fewer holidays or go overseas instead. Simpson warned that one of the UK's biggest employers will lose out to countries that do not price families out.
Public opposition is significant. A consultation to implement the tax in North Wales saw 80% of tourists who responded oppose it. Simpson said Gwynedd Council are livid, but should not be surprised.
Councils and revenue
Simpson explained why councils like the idea of a holiday tax: it raises revenues without taxing residents. However, he noted that the tax still has to be paid by someone. He described a cycle where Gwynedd taxes visitors from Norfolk and Norfolk taxes visitors from Gwynedd, with everyone's taxes going up.
He argued that taxes will keep rising because it will always be easier for councils to tax someone else as deficits grow. He suggested a thought experiment: instead of every mayor taxing visitors, let every mayor tax their own residents and give the money to high tourism areas. He said he bets very few mayors would think it is a good idea then.
