How will the new tourist tax affect London – and what could it pay for?London Mayor Lord Sadiq Khan is pushing for the swift introduction of a levy set at up to 5% of the cost of a hotel room
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Nicholas Cecil, Chief Reporter @nicholascecil1 minute ago
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A “tourist tax” is to be introduced in London.
The new levy aims to raise hundreds of millions of pounds to be ploughed back into making the capital an even more attractive city to visit.
Communities Secretary Angela Rayner was expected to unveil more details after meeting regional mayors in No10 North in Manchester.
Angela Rayner was meeting Mayors in No10 NorthPA Wire
How will levy be charged?
The Standard revealed last November that the “tourist tax” was going to be brought in for the capital.
It would see visitors staying overnight in hotels and Airbnb-style accommodation charged a small levy.
London Mayor Lord Sadiq Khan has backed the proposal, promising that money raised would be reinvested to boost tourism, and arguing that people “don’t really mind paying the extra few euros” when they visit other European cities.
However, he could face a row over the levy as it is set to be charged as a percentage of the cost of a room, rather than a fixed rate.
Business chiefs have argued for the tax to be set at a flat rate of around £2-3 per night, with a cap on the maximum number of nights for which it is charged to avoid discouraging long stays.
The Standard understands, though, that City Hall is proposing that the new tax will be percentage based but capped at no more than 5% of the cost of a room.
Mayor of London Lord Sadiq Khan backs a ‘tourist tax’PA
What could it be used for?
Tourism chiefs have stressed that the new levy should not be used to replace Treasury funding for health, education, transport and other projects in the capital.
They have emphasised that the money raised from the levy should be reinvested to attract more visitors to London and to improve the tourism experience in the city.
Lord Khan said: “A well-designed, modest levy has the potential to provide an important additional source of funding to support growth, strengthen London’s offer to visitors and help us remain globally competitive.
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“It would allow us to reinvest in the places, infrastructure, culture and experiences that make London one of the world’s greatest cities to visit, while helping manage the pressures that come with welcoming tens of millions of visitors every year.”
What do other cities do?
In Scotland, Edinburgh has introduced a tourist tax of 5% of the cost of a room, which will be charged on the first five nights of a visitor’s stay.
Glasgow is also bringing in a 5% levy, and Aberdeen 7%.
Berlin applies a 7.5% tourist tax on the cost of the accommodation.
But hotel prices are far higher in London than in Scotland, Berlin and many other European cities and a 5% levy would put on average £11.50 a night on the cost of staying in the capital, with the average hotel price being £230, according to industry research, though this varies depending on the time of year.
In Paris, the tourist tax is fixed for different types of accommodation, including 3.25 euros (£2.86) for an overnight stay in a two-star hotel and 8.45 euros (£7.43) for a four-star hotel.
Lisbon has a flat four euros (£3.52) levy, up to a maximum of seven nights, or 28 euros (£24.67) for all types of accommodation.
Paris has a ‘tourist tax’AFP/Getty
What to business chiefs say?
With thousands of jobs going in the city’s hospitality sector, Muniya Barua, deputy chief executive at BusinessLDN, has stressed: “Hotel and accommodation providers are facing a perfect storm due to significant tax hikes and rising employment costs.
“Introducing a new overnight visitor levy at this time will be extremely challenging for the sector so it’s vital that these plans are well-thought through and deliver tangible results in terms of boosting inward tourism.”
Dee Corsi, chief executive of the New West End Company, which represents businesses in this tourism quarter, said earlier this year: “A future overnight visitor levy must be proportionate and affordable, otherwise it risks harming the tourism ecosystem it is meant to support.
“That’s why we’re calling for a clear, fixed fee, similar to schemes in Lisbon, Paris and Barcelona, not a percentage-based levy.”
Ministers, though, believe a percentage-based system will protect the less-well-off who go on budget holidays and hoteliers and people offering such accommodation.
Lord Khan wants to ensure that the new levy does not undermine tourism in LondonAFP/Getty
Will it hit tourism in London?
Lord Khan has stressed he is consulting closely with the hotel and wider hospitality sector to charge the levy at a level which does not damage tourism in the city.
“I will work closely with London’s boroughs, accommodation providers, hospitality and tourism businesses and other partners, before final decisions are taken,” he said.
A Government source said “it will be up to local leaders and local voters” in England “to decide what is right for their area”.
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