London tourism tax capped at 5%, BBC understands
Mayors in England will gain powers to set an uncapped overnight visitors' levy, with London's capped at 5% of accommodation costs.
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London's proposed tourism levy will be capped at 5% of the cost of accommodation, the BBC understands. This measure comes as the government prepares to grant mayors across England the authority to establish an uncapped overnight visitors' tax.
Sir Sadiq Khan, the Mayor of London, has welcomed the forthcoming government announcement, stating that London should have the same flexibility as other global cities to raise and invest local funding. He indicated that a "well-designed, modest levy" could support the growth of London's offerings to tourists.
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Potential Revenue and Local Concerns
Analysis from January by Central London Forward indicated that a hypothetical 3% tourist levy in London could generate more than £350 million annually. However, industry bodies and some local authorities have raised concerns about the potential impact on tourism and local competitiveness.
Paul Swaddle, deputy leader of Westminster Council, stated that the cost of supporting the visitor and commuter economy in Westminster is estimated at £115 million. He also noted that VAT rates for hotels in other European cities are often lower, raising concerns about Westminster hotels becoming less competitive. Westminster Council has called for boroughs to retain at least half of the funds raised within their areas to support local services.
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Allen Simpson, chief executive of a tourism trade body, warned that a similar tax introduced in Edinburgh was already having damaging effects and could put jobs at risk in tourism-reliant communities. London Councils, representing the capital's 33 local authorities, has also requested that boroughs receive a fair share of the revenue.
Implementation Timeline
According to a government document published in July, the levy could be implemented by March 2028. Further details on how the levy would be collected, distributed, and spent are expected to be provided by City Hall and the government.
Questions this report answers
+What is the proposed cap for London's tourism levy?
The BBC understands that London's overnight visitors' levy will be capped at 5% of the cost of accommodation. This measure is part of new government powers being granted to mayors across England.
+How much money could London's tourism levy raise?
Analysis suggests that a hypothetical 3% tourist levy in London could generate more than £350 million annually. The final amount will depend on the exact rate set and the total revenue collected.
+When could the tourism levy be in place?
A government document indicates that the tourism levy could be in place by March 2028. Further details on the collection, distribution, and spending of the revenue are yet to be announced.
+What are the concerns raised by local authorities?
Westminster Council estimates supporting its visitor and commuter economy costs £115 million annually and has called for boroughs to keep half the revenue raised locally. London Councils also wants boroughs to retain a fair share of the funds.
WE FILE
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The London Travel Desk assembled this report from the outlets listed below. Language-model drafting is reviewed under human editorial supervision, with scoring notes and corrections kept visible.
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