Burnham and Rayner to hand Mayors new powers to tax tourists

The government under Andy Burnham is about to grant England's Mayors new authority to impose a controversial tourist tax. Housing Secretary Angela Rayner is set to convene with the nation's mayors to discuss proposals for an overnight fee, to be levied as a percentage of accommodation costs rather than a flat rate. This approach aims to shield budget-friendly holidays, similar to Scotland's model.

No maximum charge is anticipated. A draft document from July outlined the plan, aiming to formally empower regional authorities. The policy paper, "Rewiring the State," stated that by March 2028, local leaders would be able to present plans on how to invest the revenues. However, the move is anticipated to draw criticism from businesses, with UK Hospitality warning that such a tax would increase holiday costs as families grapple with the cost-of-living crisis.

An Oxford Economics analysis commissioned by the trade body, which evaluated three possible holiday taxes, found that all would harm jobs and spending. If implemented with a 5% levy, as much as 33,000 jobs could be lost by 2030, coupled with a £1.8bn decrease in tourism spending. The levy would also cut tax receipts to the Treasury by £688m.

During his time as Manchester Mayor, Burnham introduced a City Visitor Charge in April 2023, charging a £1 per room per night to fund initiatives aimed at boosting tourism. London Mayor Sadiq Khan has previously expressed support for a new levy, promising that the funds would be earmarked to enhance the environment around tourist areas.