London plans to impose 'tourist tax' ahead of Christmas holidays

In a latest update, the UK government officials have planned to impose a tourist tax in London city for British holidaymakers that stays in hotels and Airbnbs.

The UK’s Chancellor Reeves is reportedly preparing to give mayors powers to raise taxes by charging tourists for the cost of an overnight stay in their cities.

According to the BBC, the expected tourist tax could raise up to £240m, a year as proposed.

This decision came under the 2024 latest evaluation report that highlights that London observes almost 90 million tourists in overnight stays.

Currently, England is among the Group of seven G7-world’s seven largest so-called “advanced” economies where the national government prevents local authorities or mayors from implementing tourists’ levies.

The Greater London Authority (GLA) recently asked the Centre for Cities think tank to probe promising areas for further devolution in the capital in their latest briefing.

In a briefing released last week, the officials noted that a tourist levy exists across the G7 primary cities, including Paris, Munich, Milan, Toronto, New York and Tokyo.

With reference to that, previously in 2017, GLA estimated that a £1 a day levy, including international visitors, could raise £91m and that a 5% levy could raise £240m.

While the chief of UK Hospitality, Kate Nicholls, the trade body for the hospitality industry, called the idea ‘shocking’.

"Overseas visitors are incredibly important to central London, and across London as a whole, this is builders coming to work, businesses coming to conferences, it's families coming for concerts and theatres and going to see family and friends," says the Chief of UK Hospitality.

"This will have a really big impact on British consumers; it's a tax on hard-working British families having a short break in London and it will deter visitors from coming in.”

Kate added, "The VAT (value added tax) rate in England and Wales and Scotland is 20% and that is really important – it's a tax on a tax."

"Our customers are already paying the highest tax. Customers can vote with their feet; if we tax them out of coming to London, then we will tax the London economy out of jobs, growth and investment.”

While the spokesperson to the London mayor informed that, “Mayor Sadiq Khan has been clear that a modest tourist levy, similar to G7, would boost our economy, deliver growth and help cement London’s reputation as a global tourism and business destination."

This decision has been taken ahead of the Christmas holidays, when millions of tourists arrive to stay in London every year to celebrate the New Year festivities.

The new idea suggests, that the tourist tax could raise hundreds of millions of pounds for mayors to invest in transport businesses and public services, but it would represent a further blow for the hospitality industry, which was squeezed by tax rises and extra employment costs.

The leading think tank, Centre for Cities briefing also concluded that “London is likely to see a massive drop in visitors if it introduces a levy at a rate comparable to peer primary cities.”