Business to government: We’ll swallow the London tourist tax – but only if it supercharges international arrivals (and brings back VAT-free shopping)
Business group BusinessLDN is urging ministers to ensure a proposed overnight visitor levy is used to attract more international visitors to the capital as a gateway to the wider UK.
The group warned that government must ensure plans for a new ‘holiday tax’ do not hit the attractiveness of London and the UK as an international visitor destination.
The government’s consultation on proposals would allow Mayoral Strategic Authorities in England to introduce local overnight visitor levies, including London.
BusinessLDN – which represents over 170 leading employers in London, including many Business Improvement Districts as well as large parts of the visitor economy ecosystem such as hotels, airports and business events – said it is calling on ministers to ensure any new levy is developed in partnership with those that will be required to pay it, including by giving them a meaningful say over what the money will be spent on.
What a ‘business-friendly’ tax could look like
In its consultation response, the group argues that proceeds from the levy should be ringfenced to support growth and increase tourism rather than be used to fill budget shortfalls in other areas.
BusinessLDN is also calling for the levy to be kept as simple as possible in design and administration, which is important for providers that operate across different parts of the country.
It notes that a flat rate set at around the £2-3 per night level would be the ‘least worst’ option, with a cap on the maximum number of nights that the levy applies to avoid discouraging long stays.
To mitigate the impact of higher costs as a result of the new levy, the Government should also look again at the case for re-introducing VAT-free shopping on goods for international visitors, and for extending exemptions for Sunday trading rules to targeted areas such as the West End and Knightsbridge, the group said.
“Hotel and accommodation providers are facing a perfect storm due to significant tax hikes and rising employment costs. Introducing a new overnight visitor levy at this time will be extremely challenging for the sector so it’s vital that these plans are well-thought through and deliver tangible results in terms of boosting inward tourism,” said Muniya Barua, Deputy Chief Executive at BusinessLDN.
“The Government should in parallel take steps that can enhance the attractiveness of London and the UK, such as re-introducing VAT-free shopping for international visitors which would more than pay for itself.”
