Tourist tax considered for those staying in London

The Mayor of London, Sadiq Khan has said he is "happy to look into" the possibility of a tourist tax in London’s hotels.

It follows cross-party calls earlier this week for a small charge on visitors to the capital.

The mayor said his team would be examining the evidence from Manchester, where similar charges have been introduced, as well as other European cities.

UKHospitality, a trade body representing the sector, said additional taxes would be "extremely damaging".

Existing levies vary depending on the city and quality of accommodation. Visitors to Barcelona, staying in a four-star hotel for example, pay a charge of €4.95 per night as part of their bill, and in Paris would pay a levy of €8.13 per night.

Venice will go a step further next year by introducing a €5 charge for day-trippers to the city – part of their effort to combat cruise tourism.

Asked whether he would support a tourist tax in London, Mr Khan said: "I'm happy to look into where it’s worked, what the issues are in relation to that particular policy… we’ll be looking at what cities are doing not just across Europe, but in the UK as well."

In England, no local authority has the power to directly impose a straightforward tourist tax, though Manchester City Council, among others, has introduced a form of tourism levy via a legal workaround.

In Manchester, it is known as the City Visitor Charge and participating hotels – which are those with a rateable value of £75,000 or more – are encouraged to itemise it on guests' bills.

A report from the BBC in April 2024 stated that the levy had raised £2.8m for the city in its first year.

Pressed on whether he liked the idea of a London tourist tax in principle, Mr Khan said: "Let’s wait and see what the evidence is. I’m somebody who believes in following the evidence."

The idea was warmly discussed on Monday by local politicians at the Centre for London think tank’s annual conference.

Chris Hayward, the City of London’s policy chairman, told the conference it was something he and his colleagues were already "looking at" for the Square Mile.

"I like the principle. I think it’s a good idea, but I think how you operate it is really important."

He stressed the need to ensure "it doesn’t have the opposite effect and drive those tourists and those people you want to stay in your hotels away".

Claire Holland, chair of London Councils – the capital's local government association – said boroughs were "all for exploring with the government, and with the mayor, how there can be more fiscal devolution across London, including looking at how a tourism levy would work".

Kim Taylor-Smith, the Conservative deputy leader of Kensington and Chelsea Council, said a tourist tax was a "no brainer" and he was "absolutely in favour".

Caroline Russell, a Green member of the London Assembly, said the charge could be used to help fund more public toilets across the city.

Her Liberal Democrat colleague, assembly member Hina Bokhari, said she was also "very supportive" of the levy, and that she wanted to see the revenue raised to go towards London’s struggling nightlife sector.

Kate Nicholls, chief executive of UKHospitality, said: "London remains one of the biggest visitor destinations in the world, but the number of inbound visitors to the capital hasn't yet returned to pre-pandemic levels."

She said the UK "ranks poorly" in the global competition for tourists a high VAT rate, adding: "The introduction of a tourist tax would only damage that further."

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