Hospitality industry fears jobs at risk from plan to give mayors powers to impose ‘tourist tax’

Downing Street has said that its plans for an overnight visitor levy – or tourism tax, as it is being called – will ensure that communities keep more of the benefits from tourism.

At the No 10 lobby briefing, the PM’s spokesperson said:

double quotation mark This afternoon, mayors will meet at No 10 North to discuss the government’s devolution agenda.

As part of that, we are confirming plans to give local leaders the power to introduce an overnight visitor levy.

The fundamental principle behind this is that we trust local leaders to make decisions for their areas. That’s why we’re shifting power out of Whitehall and giving communities more control.

More than 42 million international visitors came to the UK last year, spending more than £32bn.

So this levy is about ensuring more of the benefits of that tourism stay in local communities, with leaders able to reinvest funding in priorities such as transport to high streets and public spaces.

The spokesperson also gave some further details of how the levy will work.

She said that the levy would only apply to people paying for overnight accommodation.

She confirmed that the levy would be charged as a percentage of accommodation cost, and that it would not be a flat fee. That would mean “cheaper accommodation automatically pays less”, she said. This is in line with the recommendation from the Centre for Cities in this report which said England should follow Scotland, which has a percentage-rate levy, and not Wales, which has a flat fee levy.

She said there would be no cap on the levy. But the government would expect it to be set at a level that was “proportionate”, she said.

She said mayors would be allowed to introduce exemptions for sites such as campsites.

She said shelters and refuges would be automatically exempt.

She said mayors would be able to decide how the money should be spent.

The spokesperson was unable to say if areas without mayors would be able to introduce a visitor levy, or if mayors would be able to impose the levy in some bits of their region but not others.

Downing Street has not said at what rate it expects the levy to be applied. But one model is the rate that applies in Edinburgh, where the rate is 5%, but capped so that it can only apply for five nights.