London is preparing to introduce a new tourist tax that would charge overnight visitors a fee on stays in hotels and short-term rentals such as Airbnbs. The move follows a recommendation from a cross-party oversight committee of the Greater London Authority (GLA).
London Mayor Sadiq Khan has voiced support for the tourist tax plans, but has said he will not comment on “speculation” and would wait for confirmation from the Government before making any concrete preparations to roll out the levy.
A spokesperson for the mayor of London told the Local Democracy Reporting Service (LDRS) that “The mayor has been clear that a modest tourist levy, similar to other international cities, would boost our economy, deliver growth and help cement London’s reputation as a global tourism and business destination.”
How would London’s Tourist Tax work?
The tax mimics schemes already in place in other major cities. Paris applies a fixed nightly fee per person depending on accommodation type; Berlin and Cologne use a percentage of the room cost. In Edinburgh, for instance, a 5 per cent levy is due to come into force next July and will be charged on the first five nights of a visitor’s stay.
In France and Italy, the cost varies depending on the official star rating of the property, the location and the type of accommodation.
New York City raises £493m every year through its tourist tax, whereas in Tokyo, there is a single flat fee for all tourist accommodation bookings, which raises £35m. Profit estimates for London’s proposed tourist tax have suggested it could raise up to £240m a year, according to the Centre for Cities.
This proposed London tax would charge a similar 5 per cent levy applied to average accommodation costs. This would translate to around £11.50 per night for a typical hotel stay or Airbnb stay, assuming average nightly rates, the extra charge could be approximately £10 per night. Andrew Carter, chief executive of Centre for Cities, has said: “The model the government should adopt is already underway in Scotland, where Edinburgh, Glasgow and Aberdeen are introducing levies valued at a percentage rate on overnight stays in hotels, B&Bs and short-let accommodation.”
He added, “Hopefully, introducing a tourist levy is the start of a bigger programme of devolving tax and spending powers to the capital. London is the most productive big city in the UK, and devolving more fiscal powers would give the capital more policy tools to accelerate growth in the economy.”
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When will the Government introduce this tax?
The tax is controversial: some London boroughs (like Westminster and Southwark) welcome it, while others think it’ll be off-putting to tourists. Khan and Greater Manchester Mayor Andy Burnham previously wrote a letter to the culture secretary, Lisa Nandy, and chancellor Rachel Reeves, urging them to introduce the tax.
At present, England is the only country among the G7 AKA Group of Seven (an informal group of the world’s seven largest “advanced” economies) where a national government stops local authorities or mayors from implementing tourist levies.
As reported by the BBC, Chancellor Rachel Reeves is expected to give Khan and other civic chiefs the authority to implement a tourist tax through the English Devolution and Community Empowerment Bill, which is currently going through Parliament. It is expected to be formally announced in the coming months.
