English regional mayors will have the power to charge tourists a tax for spending the night in their towns and cities, local government secretary Steve Reed has said.
Speaking ahead of Wednesday’s budget, Reed said the tax aims to empower locally elected mayors to “unlock growth through investment”, such as hosting events or improving public transport systems.
London’s Labor mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham said the new powers were good news for their cities.
But Tees Valley’s Conservative mayor, Lord Houchen, said he would not introduce the new tax, and the hospitality industry trade body warned the cost would be passed on to consumers.
The move would bring England in line with Scotland and Wales, which will introduce a tourist tax next year, of £1.30 a night for Wales and 5% for Scotland.
New York, Paris and Milan are among the countries that already charge a tourist tax, and research shows that reasonable fees have minimal impact on visitor numbers.
Reed said, “Mayors and other local leaders know their local history, their local culture, and the unique attributes of their places that attract visitors.
“But they need powers and funding to enable them to harness England’s potential and unlock growth through investment.”
Research suggests a £1-a-day tax in London could raise £91m a year for the capital.
The money raised could fund investments such as the redevelopment of Oxford Street in London or funding night buses and trams in Manchester, the government says.
Sir Sadiq said the tax would be “great news for London”, and that the additional funding would help “cement our reputation as a global business and tourism destination”.
Burnham said almost two million people visited Greater Manchester each year, contributing around £9 billion to the local economy.
He said: “The tax will allow us to invest in the infrastructure these visitors need, such as keeping our streets clean and improving our public transport system through running buses and trams, ensuring every experience is positive and memorable.”
However, Lord Houchen dismissed the tax on principle, saying: “I will not use this power.
“There will be no tourist tax on Teesside, Darlington and Hartlepool while I am mayor. Thanks, but no thanks.”
Kate Nicholls, chair of industry body UKHospitality, warned the “damaging holiday tax” could cost the public up to £518m.
She said: “Make no mistake: this cost will be passed directly on to consumers, driving inflation and undermining the government’s goal of reducing the cost of living.”
There were also signs of potential tension between council leaders and mayors, with Westminster City Council leader Adam Hug, Labor, calling for tax revenue to be shared with councils rather than retained by mayors.
Cllr Hug, whose council includes some of central London’s top attractions, said: “Whilst this scheme, as drafted, will allow the mayors’ combined authorities to collect and collect the night tax, 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 which runs until February 18, which will consider issues such as whether there should be a limit on the size of the tax.
