Labour mayors in England vow to cap tourist tax at 5%

Labour mayors across ten English city regions have pledged to cap a newly authorised “tourist tax” on overnight accommodation at 5 percent, despite the government’s plan to grant them the power to set an uncapped levy. The voluntary ceiling, outlined in a letter to Chancellor John Healey and Local Government Secretary Angela Rayner, is intended to balance the need for local investment with concerns that excessive charges could deter visitors. Signatories include the mayors of London, Greater Manchester, Liverpool City Region, West Midlands, North East, West of England, West Yorkshire, South Yorkshire, East Midlands and York and North Yorkshire, who argue the limit will still allow meaningful funding for high streets and transport while requiring local consultation before any levy is imposed.

Hospitality industry leaders have warned that even a capped levy could jeopardise jobs, estimating an additional £100‑£120 per family holiday and fearing that mayors might push the rate higher given the theoretical absence of an upper limit. UKHospitality chief executive Allen Simpson told BBC Radio 4 that local authorities, already strained by austerity, would likely “pull that lever until it snaps,” potentially forcing holiday parks to close during off‑peak seasons and reducing disposable income for tourists. Conservative shadow housing secretary David Simmonds criticised the proposal as a “double whammy,” noting that VAT on hotels already stands at 20 percent and would be applied to the new tax as well, while Reform UK’s Nigel Farage pledged that his party’s two mayors would not implement the charge, branding it a “holiday tax.”

The levy, first floated under Prime Minister Sir Keir Starmer in November, mirrors schemes already operating in Scotland and several European cities, where visitor charges fund local services but are often capped. In England, Manchester and Liverpool run voluntary, business‑led charges of £1 and £2 per room per night respectively, though regional mayors have previously lacked authority to impose such fees. The government plans to introduce legislation “in due course,” allowing exemptions for campsites but prohibiting whole‑locality exclusions to avoid confusion. Critics like caravan‑park operator John Chappell argue the tax is out of touch with the tight budgets of many tourists, while supporters contend it could generate needed revenue for local economies, positioning the debate as a test of how England balances fiscal autonomy with the competitiveness of its tourism sector.

⚡ Effects Interpreter