Budget risks taxing growth in UK tourism

The Tourism Alliance warns that today’s Budget sends mixed messages on the tourism and the visitor economy: progress on business rates and local growth, but a backward step with new powers to tax overnight stays (tourism tax).

Government has confirmed plans to let mayors (and potentially other local leaders) introduce an overnight levy on visitor accommodation, with a consultation on the design. At the same time, it has announced major multi-year funding settlements for mayors to invest in skills, business support, transport and local growth.

Business rates for retail, hospitality and leisure are set to move to permanently lower multipliers, supported by a multi-billion-pound transition package and extended business rate retention in several areas. However, the 5p discount is only a quarter of the maximum 20p discount the Government proposed last year. Changes to business rates valuations will mean that many tourism businesses’ tax bills will still significantly rise, alongside increases to the minimum wage adding extra cost. Business tax rates for our sector must continue to fall for the rest of this parliament.

These changes land alongside higher wage costs, increased borrowing and ongoing tax pressures that already squeeze margins for tourism and hospitality businesses.

Eddy Leviten, Executive Director of the Tourism Alliance, said:

“Tourism businesses are already at breaking point from higher wage, energy and finance costs. Handing mayors the power to impose a new overnight tax risks turning visitors away, including British families trying to afford a short break in the UK.

“We welcome movement on business rates and long-term, place-based funding. Those are steps in the right direction. The problem is that the gains will be wiped out if new visitor taxes proliferate on top of everything else.

“Tourism should be treated as a growth engine, not a soft target. Any proposal for a visitor levy must be tested rigorously for its impact on competitiveness and jobs, within a clear national framework, with every pound raised transparently reinvested in the visitor economy and not used to plug general budget gaps.”

The Tourism Alliance will engage fully with the consultation on overnight visitor levies and press for a joined-up Visitor Growth Strategy that supports investment, productivity and good jobs across the whole UK visitor economy.

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About the Tourism Alliance

The Tourism Alliance is the umbrella body for the UK’s tourism and visitor economy. It brings together more than 70 national tourism, hospitality, transport, events and attraction organisations to present a unified voice to Government. Its members represent thousands of businesses of all sizes across the UK, supporting jobs and growth in every nation and region.

Media contact

Eddy Leviten, Executive Director, Tourism Alliance

E: eddy@tourismalliance.com

T: +44 7768 057464