I recently joined the All Party Parliamentary Group for Hospitality at the House of Commons, which was chaired by MP Steve Double.
The meeting focused on tourism tax. This is a proposed levy on hotel rooms in the UK and is currently used in some European cities.
Several UK councils have shown an interest in such a levy, and the Scottish government’s latest budget committed to legislating to allow local authorities in Scotland to introduce this tax.
Members of the group include MPs, councillors, academics and representatives of the hospitality and tourism industry. It soon became strikingly obvious the elected politicians and academics held a different view to the hoteliers who, perhaps not surprisingly, vehemently oppose the idea of a tourism tax.
Tommy Shepherd, SNP MP for Edinburgh East, spoke in favour of the tax, as did Brigid Jones, the deputy leader of Birmingham City Council. Their main argument was that as tourists utilise the services and infrastructure of financially strapped local authorities, they should be asked to make a financial contribution.
Local authorities have had their central government funding cut by 60% in real terms over the past five years and are struggling to make ends meet, hence their search for additional revenue sources.
There are many arguments against a room-based tourist tax, but the most powerful is that [according to the Tourism Alliance] 95% of visitors don’t stay the night; most are day-trippers with the remainder using campsites, caravan parks or private accommodation through the likes of Airbnb.
The tax could also affect the UK tourism industry’s international competitiveness. The UK already has one of the highest rates of accommodation VAT – 20%. Accommodation VAT rates in the rest of Europe are generally lower: Spain and France charge 10%, while Germany charges 7% and Belgium just 6%.
The tax would be regressive because it would likely take the form of a flat-rate levy, irrespective of the price of the accommodation.
It would also be discretionary; it would be up to individual local authorities to decide whether to impose the tax and there would be no obligation for local authorities to spend the money on better facilities for tourists.
Perhaps the most obvious gap in the plan is thought doesn’t seem to have been given to the collection method.
I am not sure the technology is currently available to hoteliers to enable them to cost-effectively collect this tax. It could end up with hoteliers paying more to collect the levy – what with technology costs, labour and credit card charges – than the tax will raise.
And heaven knows how local authorities will check the accuracy of the figures submitted.
Steven Freudmann chairman, Institute of Travel & Tourism