Bath could become the first UK city to impose a tourist tax on overnight visitors, following the announcement that Bath and North East Somerset Council is considering implementing a “tourist bed tax”,
Charles Gerrish, a Conservative councillor, said that the local authority is considering the introduction of a tax to be paid by all those staying in a hotel or b&b, to help offset the £37m of cuts it is facing over the next five years, the tax would be in addition to the basic room rate and VAT, and would contribute towards the running of the Bath and North East Somerset constituency.
“We’re looking at options for generating additional revenue,” said Mr Gerrish, the Cabinet Member for Finance and Efficiency. “If you go on holiday in Europe when you stay in a hotel, you are asked to make a very small contribution to the local authority in addition to your hotel bill. When I stay in Italy, for example, I pay something like one euro per head per night.
“It is something we believe, in an area that receives as many tourists as we do from all over the world, we ought to be allowed to consider.” A £1 per person per night tax would add £12 to the cost of a three-night break in Bath for a family of four.
Several major European cities, including Paris, Barcelona, Venice, Florence, and Berlin, charge a hotel tax, however rate of VAT paid on accommodation is significantly lower in those countries, and is in fact lower in most European countries than in the UK. A proposed tourist tax would be in addition to the 20% VAT paid on accommodation. Whereas VAT rate on accommodation in Spain, Italy and France, for example, is 10 per cent and in Germany it is seven per cent.
As well as being one of the most visited cities, Bath currently has the highest hotel rates outside of London, and many oppose an additional tax which has the potential to drive visitors away with excessive prices.
Harry Tedstone, chairman of the Bath Independent Guesthouse Association highlighted that the UK is already “one of the most expensive countries to come and visit” and, also added his concern that European cities that charge the tourist tax only charge VAT of between 5 and 9% while the UK charges 20%.
Ufi Ibrahim, chief executive of the British Hospitality Association (BHA) said: “With political and economic uncertainty increasing it is more important than ever to ensure UK tourism can compete. The UK continues to have on average twice the tourism VAT rate across Europe.”
Nowhere else in the UK currently collects a tourist tax, though the idea has been “mooted” in several parts including Edinburgh and the Scottish Highlands, both of which also receive a large numbers of tourists.
ALMR Chief Executive Kate Nicholls said: “At a time when businesses are facing tightening margins and increased property and wage costs, and when pubs already pay a third of turnover in taxes, any additional costs burdens could have a hugely detrimental effect on revenue streams for retailers and undermine Bath’s economy.
“Businesses in Bath already contribute enormously through business taxes and engage in voluntary partnership work to promote the city’s fantastic hospitality sector.
“The Council may view the tax as a good way to increase revenue, but the effects on tourism spend in the city are far from certain. The Government’s own response to the Lyons inquiry states that local tourist or bed taxes could make the UK’s tourism and hospitality industries less competitive. With this in mind, we are urging local authorities to avoid increasing cost burdens for businesses in their areas and introducing taxes which may have an unfavourable effect on their own tourism offering.”