English regional mayors are set to gain the authority to impose a tourist tax on overnight stays in their respective cities, according to Local Government Secretary Steve Reed.
Ahead of Wednesday’s Budget, Reed stated that the measure aims to empower locally-elected mayors to “unlock growth through investment,” facilitating initiatives such as events and public transport improvements.
London’s Labour Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham have welcomed the new powers as beneficial for their cities.
However, Tees Valley’s Conservative mayor, Lord Houchen, has stated he will not implement the levy. The hospitality industry’s trade body has also cautioned that the cost would ultimately be borne by consumers.
This move would align England with Scotland and Wales, both of which are scheduled to introduce a tourist tax next year, set at £1.30 per night for Wales and 5% for Scotland.
Cities such as New York, Paris, and Milan already have tourist taxes in place, with research indicating that reasonable fees have a minimal impact on visitor numbers.
Reed commented, “Mayors and other local leaders are intimately familiar with their local history, culture, and unique attributes that attract visitors.”
He added, “They need the necessary powers and funding to harness England’s potential and unlock growth through strategic investment.”
Studies suggest a £1 per day levy in London could generate £91 million annually for the capital.
The revenue generated could be used to fund projects such as the revitalization of Oxford Street in London or the extension of late-night bus and tram services in Manchester, according to the government.
Sir Sadiq Khan called the levy “great news for London,” stating that the additional funding would help “cement our reputation as a global tourism and business destination.”
Burnham noted that Greater Manchester welcomes nearly two million visitors each year, contributing approximately £9 billion to the local economy.
He added, “The levy will allow us to invest in the infrastructure these visitors need, such as maintaining street cleanliness and enhancing our public transport system with later running buses and trams, ensuring a positive and memorable experience for everyone.”
Conversely, Lord Houchen rejected the levy on principle, stating, “I won’t be using this power.”
“There will be no tourist tax in Teesside, Darlington, and Hartlepool for as long as I’m mayor. Thanks, but no thanks.”
Kate Nicholls, chairwoman of UKHospitality, warned that the “damaging holiday tax” could cost the public up to £518 million.
She stated, “Make no mistake – this cost will be passed directly on to consumers, drive inflation, and undermine the government’s aim to reduce the cost of living.”
Potential friction between council leaders and mayors has also emerged, with Westminster City Council leader Adam Hug calling for the revenues from the tax to be shared with councils rather than retained solely by mayors.
Cllr Hug, whose council encompasses major central London attractions, stated, “While this scheme as drafted will allow mayoral combined authorities to charge and collect the overnight levy, it is essential the government ensures mayors split the revenue with the local councils in their area to support these services, without which economic growth will suffer.”
The plans will be subject to a consultation period running until February 18, which will address issues such as potential caps on the size of the levy.
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