Lyon’s Enquiry – Tourism Taxation
Sir Michael Lyons has released an interim report and consultation paper from his enquiry into local government structure and council tax reform. The inquiry is focused on;
•
The strategic role of local Government
•Whether there is further scope for devolution or centralisation of
powers and responsibilities
•Managing pressures on local services and the effectiveness of their management
•The scope for a new agreement between central and local Government
The most important issues for the tourism industry is a section on "Tourist-related taxes” (see below)
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Tourist-related taxes
2.98 It is not only the people who live and pay council tax in an area who benefit from local
public services, and local prosperity and success are not dependent on local residents alone.
In many areas of the country local economies depend on tourism and the contribution made
by the visitor economy. Taxes on tourist activity have been suggested as a way of raising
revenue for authorities, and ensuring that visitors contribute to the local public services they
use.
2.99 I received submissions and took opinions on this subject from a variety of organisations
representing the tourist industry, and from some local authorities, and discussed the issue
during my regional events. Tourist taxes were also looked at by the Balance of Funding
Review on the basis of a paper prepared by the Local Government Association.
2.100 The most frequent proposal was for a local tax on hotel and similar accommodation. Such
local taxes operate in a number of other countries across the world, including various US
states, Austria, the Netherlands and France. The tourist industry expressed a concern that a
tax on accommodation would make England a more expensive and therefore less attractive
destination for tourists, who might choose to go elsewhere or reduce the length of their visit.
This might have adverse effects on the economy. They also pointed out the need to assess
any possible distortionary effects and the compliance costs (particularly for small
businesses), and noted that some other countries had hypothecated revenues in some way in
order to make the tax more acceptable.
2.101 Some stakeholders suggested local sales taxes, which would raise revenue from tourists as
well as residents, as an alternative. I also received research commissioned by the Association
of London Government on the options for levying taxes on restaurants, entertainment
venues and sporting events. Charging and trading powers are another means by which local
authorities can raise revenue from tourist activities. Finally, one of the possible rationales
for a tourist tax would be to ensure that tourists contributed to the costs they can impose
on the local community and the environment. Road pricing schemes might have a role to
play in addressing some of these concerns in National Parks and other rural areas where
tourists are the primary cause of traffic related congestion and environmental damage.
2.102 I am interested in exploring this issue further, though I have noted that considerable further
work would need to be undertaken if new forms of taxation were to be contemplated.
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Lyons suggests taxation on tourist activity will raise local authority revenue and ensure visitors contribute to the local public services they use.” There appears to have been submissions both for and against a tourist tax and Lyons highlights his interest in exploring this further.
This is clearly a very important issue for the tourism industry as a whole and any taxation scheme would have implications for all stakeholders.
Derek Merkl of "Three Abbey Green" in Bath has started an anti BED TAX
petition to the Prime Minister on the 10 Downing Street "petitions" website
The petition is at the following URL:
