Industry hits back over proposed London tourism tax

The proposals come in a new study by the London Finance Commission, which is calling on the Government to devolve greater powers to the capital following the Brexit vote.

It notes that similar taxes are already used in New York, Paris, Berlin and Rome, and that a ‘modest’ levy could be used to fund London’s tourism offering.

Khan said devolution would allow London to better manage its economy and public services.

Industry backlash​

But the British Hospitality Association (BHA) slammed the plans as ‘madness’ and ‘extremely worrying’ for businesses.  

“Gouging tourists does not fit with the idea that London is open for business," said BHA chief executive Ufi Ibrahim. 

"A bed tax, however small, will discourage guests from staying overnight and reduce the amount they spend in the wider London economy, impacting shops and restaurants as well as hotels."

She added that the proposals would give a 'greater advantage' to room sharing platforms such as Airbnb, which are already exempt from the UK's 20 per cent tourism VAT rate and would not have to pay a bed tax.

Ongoing issue​

Similar plans to introduce a tourism levy in Bath and Edinburgh are subject to an ongoing debate,​ but have met with opposition from local business owners.

London does not currently have the legal power to introduce a such a tax, but the Government has previously opposed similar proposals on the grounds that they would harm the hospitality and tourism sector.