MPs say that tourist taxes should be “treated with caution” as UK councils explore the possibility of levying a tax on tourists.
The All-Party Parliamentary Group for Hospitality said that a significant cut in the rate of VAT that is currently paid by hotels would be needed if any tourist tax was to be introduced.
Local councils across the UK are considering the possibility of a tourism tax, with Bath and North East Somerset Council asking central Government to “introduce a levy on local tourism and short-term holiday lettings”.
The law does not currently allow a tax on hotels or restaurant, but Bath has proposed a £1 per night tax on hotels in the area.
Steve Double MP, Chair of the All-Party Parliamentary Group for Hospitality, 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.”
The report accepts that local authorities are under pressure but noted that any implementation of a levy would be difficult. Issues surrounding the collection of the tax and the status of homestay service Airbnb could complicate the situation further.
According to the report, the UK hotel industry is the second most taxed in the European Union (EU), while noting that in countries where a tourist tax has been implemented, the rate of VAT in the hospitality industry has been reduced.