In brief
- Regional cities in the UK will be able to start charging a tourist levy later this year.
- The proposal will bring British cities in line with many other international destinations.
The bill is about to get steeper for the 1.2 million Australians who travel to the UK every year as British mayors will soon have the power to charge a so-called "tourist tax" on accommodation.
Last week the UK government announced it was going to be pressing ahead with the controversial levy which Prime Minister Andy Burnham — the so called "King of the North" — hopes will help move power and money way from London.
Called the "Overnight Visitor Levy," it gives regional mayors the option to tax people on a percentage of their stays at hotels, bed and breakfasts and other types of accommodation.
Burnham— who replaced Keir Starmer as prime minister in July— sees the levy as a way of financially empowering regional cities.
He said last week the tax would come into force towards the end of the next financial year, with mayors expected to set out spending plans for the funds raised by early 2028.
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But the plan has parts of the UK economy worried.
What does it mean for tourists?
The levy will be set at the discretion of city councils but on Friday Labour mayors in 10 regional cities said they would cap the charge the charge at five per cent, following widespread concerns from the hospitality industry that the levy would dampen spending.
An exact date for the levy's introduction has not been announced but Burnham said the tax would come into force towards the end of next financial year and apply to both Britons and international tourists.
The exact terms of the levy could vary from city to city, but mayors in London, Greater Manchester, Liverpool City Region, West Midlands, North East, West of England, West Yorkshire, South Yorkshire, East Midlands and York and North Yorkshire have all agreed to the five per cent cap.
Two Reform UK mayors and two Conservative party mayors have said they would oppose any levy — so its possible the price of accommodation will go up in some cities, but not others.
Is this a new idea?
While the five per cent levy would be new for regional cities in Britain, it's not a UK first.
In July, Edinburgh launched a 5 per cent levy on accommodation that's capped at five nights and similar taxes are already common around the world.
New York, LA, Brussels, Amsterdam, Toronto and Montreal all have their own equivalent charges.
Wales is set to introduce it's own £1.30 per person per night levy in April of next year.
How has it been received in the UK?
The move has not been supported by UKHospitality, which represents the sector. It said the move would hurt British families and add to red tape.
"Give mayors one tax-raising power on one sector and they will pull that lever until it snaps," said Chief Executive Allen Simpson.
Simpson cited research by consultancy Oxford Economics estimating that a fully implemented 5% levy by 2030 would cost around 33,000 jobs and reduce economic output by £2.2 billion ($2.98 billion).
The industry also argues that British hospitality already pays 20% sales tax, double the norm across much of Europe.
— With additional reporting by Reuters news agency.
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