‘Jobs will be lost’ as Rachel Reeves to tax holidaymakers for staying | Politics | News
Holidaymakers will have to pay extra tax to stay in a British hotel, Rachel Reeves has revealed in her budget. It is expected to give regional authorities, led by the mayor, the power to impose a tourist tax that would increase the cost of a hotel room or Airbnb-style rental by up to 5%. The goal is to provide mayors with more funding to grow local economies through transportation and infrastructure plans.
However, UK Hospitality, the trade body that represents hotels, restaurants and bars, said the tax would mean “further job losses”, stating that the British tourism sector was already suffering due to tax increases and the increase in the minimum wage. Kate Nicholls, Chief Executive of UKHospitality, said: “If this is true, it would be another shocking U-turn for a Government that just two months ago pledged in the House of Commons not to introduce a tourism tax and even promised the industry the same in writing.
“I know the government is concerned about the cost of living, but this holiday tax is little more than a higher VAT rate for holidaymakers. Brits undertake more than 89 million overnight trips in the UK, staying a total of 255 million nights. This is a bill we will all have to pay and will only serve to raise prices and increase inflation.”
“At a time when Ireland has reduced VAT on accommodation to 9% and Germany currently has a VAT level of 7%, this will effectively increase our VAT rate to 27%.
“We need to get consumers to spend, but that will only mean more people cutting back and more job losses, on top of the massive damage from last year’s budget.
“Hospitality cannot once again foot the bill for the rest of the economy.”
The chancellor said he wanted to fund measures to grow the economy, including infrastructure projects, but had to abandon plans to raise income tax and began looking for more ways to send money to regional authorities.
This would be a U-turn from the position put out by Sir Chris Bryant MP, then Tourism Minister, who spoke in the House of Commons in September: “We have no plans to introduce a tourism tax.”
But local government secretary Steve Reed is pressing the Chancellor to give local authorities the power to raise more taxes, including the tax on hotel rooms.
