UKHospitality has backed a report from The All-Party Parliament Group for Hospitality (APPG) highlighting the need to reconsider calls for tourist tax.
The report analyses the levy on hotel/accommodation rooms currently in place in some European cities, and calls for a “significant cut” in the rate of VAT on hotels should a tourist tax be introduced in the UK.
The rationale behind the support of tourist tax is that the funds raised go back into supporting local facilities and services that tourists use during their visit. However the tax is seen as controversial as the UK already has the second highest taxed hotel sector in the EU.
Additionally, countries where a tourist tax has already been implemented have reduced rates of VAT on hospitality businesses – Italy and France at 10%, Germany 7% and Belgium and the Netherlands 6%, in comparison to 20% in the UK.
The report by the APPG has also identified a number of challenges in implementing a levy, including collection processes and fairness vis a vis home-sharing platforms, as well as questioning the fairness of imposing a tax solely on overnight visitors who tend to contribute more to the local economy than day visitors.
The report recommends that councils should examine all options for funding that may be present and potentially “less costly” than a tourist tax, along with the longer-term impacts on consumers, businesses and the economy before taking any decisions on the principle of introducing one.
Steve Double MP, All-Party Parliament Group chair, said: “Our report recommends that any moves by councils across the UK to introduce a tourist tax need to be treated with caution. Local authorities must fully examine the impacts on consumers, businesses and the local economy before taking any decisions, especially in regard to the overall tax burden that is currently present on hospitality and tourism businesses.
“While we acknowledge that local services countrywide are under pressure and councils are looking for a new potential revenue generator to remedy this shortfall, the UK has the second highest taxed hotel sector in the EU. Reducing the overall tax burden of the sector, including cutting VAT significantly for hospitality and tourism businesses, would help mitigate industry opposition to the introduction of a tourist tax.”
Kate Nicholls, CEO of UKHospitality, which acts as secretariat of the All-Party Parliamentary Group for Hospitality, added: “Support for local services and communities is of the upmost importance, but it cannot be at the sole expense of one faction of hospitality. Hotels in the UK already contribute heavily in taxes and to introduce another levy on an already highly-taxed industry is cause for concern.
“It is also important to note that home-sharing platforms such as Airbnb will always be outside of this tax, meaning that hotels will be hit hardest. The latest findings highlighted in the report also go as far to show that the introduction of a tourist levy would discourage visitors. Local authorities need to press pause on this dash for cash and properly revaluate the wider impacts of a tourist tax.”