By Peter Adams, Editor, CLH News
Reports that Chancellor Rachel Reeves is considering introducing a tourist levy have, unsurprisingly, sparked outrage from industry leaders and organisations alike.
Once again, the hospitality and tourism sectors – already reeling from rising costs, increased National Minimum Wage obligations, and higher Employer National Insurance Contributions – find themselves in the government’s crosshairs for yet another tax.
It’s not hard to see what’s happening here: both central and local governments are running out of our money, and their solution, as always, is to dig deeper into the pockets of businesses and taxpayers.
The trouble is that the very people devising these policies – those in Westminster and Whitehall – have likely never run a business, let alone one in an industry as precarious and challenging as hospitality.
I’m often reminded of American economist Thomas Sowell’s wise words: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
This sentiment perfectly encapsulates the frustration many of us feel. Decisions like this are made by those who will never face the consequences, yet the burden falls squarely on the shoulders of businesses and the hardworking individuals trying to make ends meet.
As a self-confessed libertarian, I believe taxation should be minimal and purposeful. Yet, our tax burden continues to move in the wrong direction.
According to the Adam Smith Institute, Tax Freedom Day – the point in the year when the average taxpayer stops working for the government and starts working for themselves – fell on June 12th in 2024 and is projected to slip even later, to June 22nd by 2028. That’s 161 days of working solely to pay taxes, an indictment of how much is taken from us with little to show for it.
A tourist tax, some argue, could be a “good thing” if the revenue is spent locally and wisely. They point to other countries implementing similar measures as justification.
But a tax is a tax, no matter how you dress it up, and the reality is that few believe it will be spent effectively. This isn’t about creating a sustainable funding model for local areas – it’s about plugging holes in government finances.
And let’s be honest: taxes like these have consequences. Ryanair’s decision today (one I applaud) to cut 800,000 seats from its 2025 Spain summer schedule, citing excessive airport fees, is a prime example.
They’ve voted with their feet (or their planes, in this case), showing exactly how damaging short-sighted taxation policies can be.
I sympathise with those who argue that visitors from countries imposing similar levies on British tourists should contribute while visiting the UK.
It’s a fair point, but they have lower levels of hospitality VAT, by a huge margin in some cases, furthermore, I’ve personally seen how these taxes impact tourism. For nearly two decades, I holidayed in a tranquil cove in the Balearics.
But after escalating tourist taxes and other fees, I decided enough was enough. I haven’t been back in five years, and I doubt I ever will.
Tourism and hospitality are lifelines for the UK economy, contributing billions annually and supporting millions of jobs. Piling yet another financial burden onto these sectors – particularly during a cost-of-living crisis and a period of stagnant economic growth – risks further alienating customers and businesses alike.
The government’s constant reliance on additional taxes to plug financial gaps is a recipe for disaster.
Until we start seeing tangible benefits for these escalating taxes (and I can’t say I’ve seen any so far), businesses and consumers will continue to lose patience.
If a tourist tax is implemented, it will only serve to exacerbate the frustration and resentment felt by an already overtaxed nation.
So, as the debate around the tourist levy rages on, I’ll leave you with this: when taxes become oppressive, people will vote with their wallet, their feet, or, in the case of the hospitality sector, an empty pillow, leading lost revenue!