Expanded Holiday Tax Will Hike Costs For Families UKHospitality Warns
UKHospitality has warned that Government plans to extend tourist tax powers to every strategic authority in England could put 33,000 hospitality jobs at risk, wipe £2.2 billion off national GDP, and add £100 to the cost of the average family holiday.
The warning comes after the Government set out its intention, in its ‘Rewiring the State’ policy paper, to ensure every area of England has a strategic authority in place by 2028 — with each newly empowered to introduce a holiday tax.
In response, UKHospitality has written to the Prime Minister proposing an alternative ‘holiday bonus’ scheme, under which central government revenues would be devolved to local authorities based on visitor numbers, mirroring existing approaches to income tax and business rates.
The trade body argues such a model would incentivise tourism and support growth, rather than imposing a blanket tax that risks jobs, investment and the sector’s recovery.
Our response
Allen Simpson, Chief Executive of UKHospitality, said: “As we warned would be the case, proposed holiday tax powers for Mayors are being swiftly expanded to every strategic authority in England.
“It’s clear the Government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost-of-living crisis.
“I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs.
“The solution is simple. Treat hospitality the same as every other sector. Instead of devolving taxation powers, devolve central government revenues to local authorities through a holiday bonus instead.
“Rewarding local authorities with fixed revenue per visitor night, for example, incentivises tourism and drives economic growth, rather than costing jobs, deterring visitors and making family holidays more expensive.
“The cost of lost VAT and increased benefits through reduced economic activity and employment will in many areas outweigh the revenues raised by a tax. A holiday bonus is the right kind of devolution – more revenue and control for local communities, without the lost jobs caused by a holiday tax.”