Bed Tax Would Damage UK Tourism

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. October 14, 2008

LONDON, UK, March 15, 2006. The UK already has the second highest level of taxation of any tourism destination in the world. The introduction of a local tourist accommodation tax would push the tax on accommodation in the UK to almost three times the European average, the Tourism Alliance has told the Lyons Inquiry into local government funding.

In its submission, Brigid Simmonds, Chairman of the Alliance - which represents over 40 tourism associations throughout the UK - says that the so-called 'bed tax' is inequitable because it would target a very small percentage of visitors. Simmonds said "On average, only 12 per cent of visitors to a UK destination stay overnight . . . and they would end up subsidising the services and facilities used by day visitors."

With no statutory register of accommodation providers, local authorities would find it very costly to raise a tax on many small establishments even though Bed and Breakfasts accounted for some 20 per cent of all overnight stays. "The imposition of an accommodation tax is counter to Government's efforts to reduce the regulatory burden on small businesses" said Bob Cotton of the British Hospitality Association and a Tourism Alliance director.

The Alliance says that international tourism is extremely price sensitive and that studies have shown that a one per cent increase in the cost of visiting Britain reduces revenue by 1.3 per cent. Stephen Dowd, Chief Executive of UKinbound and also a Tourism Alliance Director added "Tourists in the UK more than pay their way by contributing some lb12bn per annum to the Government for the provision and maintenance of the public resources they use."

The submission points out that the reduced cost of travel to overseas destinations has resulted in an enormous increase in outbound tourism. The result has been stagnating growth in the domestic tourism market and a sharp increase in the UK's tourism deficit as UK destinations have struggled to compete with the lower costs of their European counterparts.

The Alliance says that even if UK residents do not swap domestic holidays for overseas holidays, an accommodation tax will provide a disincentive for people to stay overnight in UK destinations. "Many small tourism businesses already see themselves under threat as a result of cheap, overseas flights and lower tax rates in other European destinations. Introducing a further tax would be seen as detrimental to their long-term survival."

The submission concluded that "Many tourism departments fully recognise that the negative impact on the local industry will almost certainly outweigh any advantage. They are in the unenviable position of knowing that it will harm local businesses if they support it, but that they will not receive the funding they require to support the industry unless it is introduced. If more money is required to fund local tourism-related infrastructure, then this should come from a greater retention of the existing business rates and/or from a greater re-allocation of central government funds."

For further information please contact:

Bob Cotton, Chief Executive, BHA & Tourism Alliance Director on 07718 368049 or Stephen Dowd, Chief Executive, UKinbound & Tourism Alliance Director on 020 7734 9569