English regional mayors will be given the power to charge tourists for overnight stays in their towns and cities, Local Government Secretary Steve Reed has said.
Speaking ahead of Wednesday’s budget, Reid said the levy is aimed at empowering locally elected mayors to “unlock growth through investment” such as organizing events or improving public transportation systems.
Labor mayors of London Sir Sadiq Khan and Andy Burnham of Greater Manchester said the new powers were good news for their cities.
But Tees Valley’s Conservative mayor Lord Houchen said he would not impose the new levy – and the hospitality industry’s trade body warned the cost would be passed on to consumers.
The move will bring England in line with Scotland and Wales, which will bring in a £1.30 per night tourist tax for Wales and 5% for Scotland next year.
New York, Paris and Milan are among those that already charge tourist taxes, with research showing that reasonable fees have minimal impact on visitor numbers.
Reid said: “Mayors and other local leaders know their local history, local culture and the unique features of their places that attract visitors.
“But they need the powers and money to enable them to harness England’s potential and unlock growth through investment.”
Research suggests a £1 per day levy in London could raise £91m a year for the capital.
The government says the money raised could finance investments such as revitalizing Oxford Street in London or funding late-night buses and trams in Manchester.
Sir Sadiq said the levy would be “very good news for London”, with the additional funding helping “to strengthen our reputation as a global tourism and business destination”.
Burnham said around two million people visit Greater Manchester each year, contributing around £9 billion to the local economy.
He said: “The levy will allow us to invest in the infrastructure needed for these visitors, such as keeping our roads clean and enhancing our public transport system through later-running buses and trams, ensuring every experience is a positive and memorable one.”
However, Lord Houchen rejected the levy on principle, saying: “I would not use this power.
“There will be no tourist tax in Teesside, Darlington and Hartlepool as long as I’m mayor. Thanks, but no thanks.”
Kate Nicholls, chair of industry body UKHospitality, warned that the “damaging holiday tax” could cost the public up to £518m.
She said: “Make no mistake – these costs will be passed directly on to consumers, driving up inflation and undermining the government’s aim to reduce the cost of living.”
There were also signs of potential tension between council leaders and mayors, with Westminster City Council leader Adam Hughes, with Labour, calling for revenue from the tax to be shared with councils rather than kept by mayors.
Cllr Hugh, whose council includes some of central London’s major attractions, said: “Although this plan as drafted will allow mayors’ joint authorities to charge and collect the levy overnight, it is essential that the Government ensures that mayors split the revenue with local councils in their area to support these services, without which economic growth will suffer.”
The plans will be subject to a consultation running until February 18, which will consider issues including whether there should be a cap on the size of the levy.
<a href