London Mayor Explores Potential Tourist Tax for Hotel Stays

The Mayor of London, Sadiq Khan, has stated he is “happy to look into” the prospect of implementing a tourist tax for hotels in London. This announcement follows cross-party appeals made earlier this week for a modest charge to be placed on visitors to the capital. The mayor indicated that his team would be reviewing data from Manchester, where similar charges have been introduced, as well as from other European cities. UKHospitality, a trade organization representing the sector, commented that additional taxes would be “extremely damaging.” Existing levies vary depending on the specific city and the standard of accommodation. For example, visitors to Barcelona staying in a four-star hotel pay a charge of €4.95 per night as part of their bill, and in Paris, a levy of €8.13 per night would be applied. Venice plans to take a further step next year by introducing a €5 charge for day-trippers to the city, as part of its efforts to manage cruise tourism. When questioned about his support for a tourist tax in London, Mr. Khan responded: “I’m happy to look into where it’s worked, what the issues are in relation to that particular policy… we’ll be looking at what cities are doing not just across Europe, but in the UK as well.” In England, no local authority possesses the power to directly impose a straightforward tourist tax; however, Manchester City Council, among others, has implemented a form of tourism levy through a legal workaround. In Manchester, this is known as the City Visitor Charge, and participating hotels – those with a rateable value of £75,000 or more – are encouraged to itemise it on guests’ bills. A report from the BBC in April 2024 indicated that the levy had generated £2.8 million for the city in its inaugural year. Pressed on whether he approved of the principle of a London tourist tax, Mr. Khan stated: “Let’s wait and see what the evidence is. I’m somebody who believes in following the evidence.” The concept was positively discussed on Monday by local politicians at the annual conference of the Centre for London think tank. Chris Hayward, the City of London’s policy chairman, informed the conference that he and his colleagues were already “looking at” this matter for the Square Mile. “I like the principle. I think it’s a good idea, but I think how you operate it is really important.” He emphasized the need to ensure “it doesn’t have the opposite effect and drive those tourists and those people you want to stay in your hotels away.” Claire Holland, chair of London Councils – the capital’s local government association – said boroughs were “all for exploring with the government, and with the mayor, how there can be more fiscal devolution across London, including looking at how a tourism levy would work.” Kim Taylor-Smith, the Conservative deputy leader of Kensington and Chelsea Council, described a tourist tax as a “no brainer” and affirmed he was “absolutely in favour.” Caroline Russell, a Green member of the London Assembly, suggested the charge could be utilized to help fund additional public toilets across the city. Her Liberal Democrat colleague, assembly member Hina Bokhari, expressed that she was also “very supportive” of the levy and wished for the revenue generated to be allocated towards London’s struggling nightlife sector. Kate Nicholls, chief executive of UKHospitality, commented: “London remains one of the biggest visitor destinations in the world, but the number of inbound visitors to the capital hasn’t yet returned to pre-pandemic levels.” She added that the UK “ranks poorly” in the global competition for tourists due to a high VAT rate, concluding: “The introduction of a tourist tax would only damage that further.”