Editor’s Viewpoint: Enough is Enough – The Chancellor Must Stop Taxing Hospitality to Death

By Peter Adams, Editor, CLH News.

With just days until Chancellor Rachel Reeves delivers her Budget, the warnings from our sector have reached fever pitch. And rightly so.

As our front-page coverage demonstrates, hospitality leaders are sounding the alarm about the catastrophic impact of relentless cost increases – closures are mounting, jobs are being lost, and businesses that have served their communities for generations are hanging on by their fingernails.

But here’s the bitter irony that should make every policymaker sit up and take notice: as we reveal on page 7 in out weekly digital issues of #291, the Government’s beloved “sin taxes” are actually collecting LESS revenue for HMRC. Who would have thought that the more you tax something, the less the Treasury collects? Well, apparently not the mandarins in Whitehall.

These taxes are regressive, plain and simple. They were designed for one reason only – to extract more revenue from the Treasury’s favourite cash cow.

But as the evidence now clearly shows, this strategy is spectacularly backfiring.

The Institute of Economic Affairs has stated unequivocally a few years back that there should be “no debate about whether taxes on food, alcohol, tobacco and soft drinks are regressive.” Their research argues that these levies “can cost poor families up to ten times more than they cost the wealthy.” Another unintended consequence that hits the very people politicians claim to want to protect.

I remember discussing this very issue years ago when Denmark introduced its notorious “Fat Tax” in 2011, taxing foods with saturated fat content above 2.3%. The policy lasted just 15 months before its unintended consequences became too blatant to ignore.

Many Danes simply absorbed the costs by making savings elsewhere in their budgets or buying cheaper versions of the same products. The tax failed on every measure – it didn’t change behaviour, it hurt the poorest hardest, and it was quietly abandoned.

Yet here we are in 2024, seemingly determined to repeat the same mistakes.

And now, as if the hospitality sector hasn’t suffered enough, we learn the Chancellor is preparing to give local authorities the power to implement a tourist tax – another ill-conceived levy that will “rip off” the already cash-strapped British public.

Let’s look at the numbers. According to VisitBritain, Brits took over 89 million overnight trips in England in 2024, staying for a total of 255 million nights. A 5% holiday tax would cost the public an eye-watering £518 million in additional taxation.

But here’s where it gets truly egregious. Holiday taxes are charged on top of accommodation costs, like VAT. The combination of 20% VAT, a 5% holiday tax, PLUS the VAT charged on the tax itself, would create an effective 27% VAT rate for consumers on their holidays – making it one of the highest in Europe.

Yes, many European cities charge tourist taxes. But those cities also charge significantly lower VAT rates for hospitality. That would NOT be the case in England. This isn’t tax policy – it’s a tax scam.

Our sector has been battered by years of rising costs: soaring energy bills, increased wages, spiralling food costs, and now threats of further employer National Insurance increases.

Businesses are closing at an alarming rate, and skilled workers are leaving the industry in droves.
The message to Chancellor Reeves is simple: ENOUGH IS ENOUGH.

The hospitality sector cannot be treated as an endless source of revenue to plug gaps in the public finances. We need a Budget that recognizes the vital role this industry plays – not just in GDP terms, but in employment, community cohesion, and the fabric of British life.

Leave something in the wallets and purses of the overtaxed public. Give businesses breathing space to invest, to grow, to employ. Otherwise, we won’t have a hospitality sector left to tax.

The Chancellor has a choice: support a thriving industry that generates real, sustainable revenue through growth and employment, or continue down this path of punitive taxation that delivers diminishing returns and destroys jobs.

For the sake of our pubs, our restaurants, our hotels, and the millions who work in them – make the right choice, Chancellor. Our sector is on its knees. We cannot take any more.

I would encourage all our readers to follow us on X/Twitter @CLHNews and visit our website at www.catererlicensee.com to sign up for our twice weekly e-newsletter.

I can always be contacted at edit@catererlicensee.com