Ministers have unveiled plans to hand mayors across England the authority to impose a so‑called “tourist tax” on holiday accommodation, sparking a fierce debate between local leaders eager for new revenue and the hospitality sector fearing a downturn in visitor numbers. The announcement, made by Angela Rayner, the Secretary of State for Local Government, on Thursday, gives mayors the freedom to set a levy without a national cap and to decide how the funds are spent. Proponents argue the measure could shore up cash‑strapped councils, while critics claim it risks deterring the very visitors that generate the income.
Mayors Gain New Powers, Hospitality Voices Fear
The proposal emerges from a consultation launched by Keir Starmer’s government and aligns England with many European cities and parts of the US that already collect overnight visitor levies. Under the scheme, mayors will be able to charge a percentage of the price of an overnight stay—up to a suggested 5 % in most major cities—while also deciding whether to exempt occasional rentals, festival sites, or long‑term lets. The first detailed plans are expected early in 2028.
Hospitality bodies have been quick to warn of the potential fallout. UKHospitality estimates a 5 % levy could cost the sector £2 billion and lead to the loss of roughly 33,000 jobs, with tourism‑dependent regions such as the Lake District and Blackpool bearing the brunt. Eddie Nelder, co‑owner of the Choice Hotels chain, described the move as “another hammer blow” for an industry already struggling with inflation, rising national insurance contributions, and higher minimum wages. “We’re trying to stay alive, and this feels like we’re being strangled,” he said.
Regional Leaders Welcome a Vital Revenue Stream
Mayors, on the other hand, have largely welcomed the new powers. In a joint letter, Labour metro mayors pledged to cap their charges at 5 % and highlighted the success of similar levies in cities like New York, Paris, and Rome, where tourism continues to thrive. Kim McGuinness, mayor of north‑east England, said the levy could fund major events such as the Great North Run, boost local businesses, and help the region attract international gatherings. “The money raised here would stay here,” she argued, emphasising the desire for local control over investment.
Regional mayors argue that the funds would be reinvested in the very services—both for residents and visitors—that have suffered from years of austerity. Last year alone, the government provided emergency funding of £1.3 billion to a record 28 councils, underscoring the depth of the financial strain. By allowing mayors to raise and allocate taxes, ministers hope to give communities a lifeline at a time when many are teetering on the brink of bankruptcy.
The Financial Stakes: Jobs and Economy at Risk
The hospitality industry’s concerns are not merely speculative. Evidence from other jurisdictions shows that modest tourist taxes can coexist with growing visitor numbers, but the scale of the proposed levy—unbounded across England—remains untested. UKHospitality’s chief executive, Allen Simpson, warned that the power to set taxes “at any level they want” could lead to over‑charging, especially if mayors fail to coordinate a consistent approach. He pointed to European cities where tourism taxes are capped, suggesting a similar safeguard for England would protect both visitors and businesses.
Premier Inn’s owner echoed these worries, calling the plan “hugely damaging” and urging ministers to reconsider. The chain, which operates across the UK, fears that a tax could make British destinations less competitive compared with neighbouring countries that do not impose similar charges. The industry also points to the recent “Great British summer savings scheme,” which cut VAT on domestic holidays, as evidence that the government is already trying to stimulate travel—making a new levy appear contradictory.
A Mixed Response Across the Country
Not all mayors are eager to impose the levy. In several east‑coast authorities, mayors from Reform UK and the Conservatives have announced they will refuse to introduce the tax, arguing that their regions do not need the extra burden on visitors. Meanwhile, Wales and Scotland already operate their own systems: Edinburgh set a 5 % tourist tax in July, and Welsh councils will charge £1.30 per person per night from April 2027. The English scheme, if passed, will bring the country more in line with its devolved nations, though with greater flexibility for individual cities.
The government’s broader agenda includes handing more fiscal powers to local leaders ahead of Andy Burnham’s first budget as mayor of Greater Manchester. Ministers have promised a “devolution” drive that could see further tax‑raising authority transferred from Whitehall. At the same time, they have taken steps to ease pressure on hospitality, such as cutting business rates for pubs and live‑music venues, suggesting a balancing act between supporting local services and protecting the tourism economy.
Why it Matters
The debate over the new tourist levy strikes at the heart of how Britain funds its public services while maintaining a competitive tourism sector. For cash‑strapped councils, the ability to generate revenue directly from visitors could mean the difference between viable community amenities and further cuts. For the hospitality industry, which is already grappling with inflation and rising employment costs, an uncontrolled tax threatens not only profitability but also the very experience that draws tourists to England’s coastal towns, historic cities, and cultural events. The outcome will shape the financial future of local communities, influence visitor numbers, and set a precedent for how devolved powers are exercised across the nation.