Mayors in England are set to be granted the authority to introduce an overnight visitor levy on tourists, according to government plans to be announced later. The proposal, dubbed a 'tourist tax,' would allow local leaders to impose a percentage-based charge on hotel, bed and breakfast, and other accommodation stays, rather than a flat fee. The government has not yet released specific details, but the plan is expected to be discussed during a virtual meeting between Housing Secretary Angela Rayner and mayors at No 10 North on Thursday afternoon.

The policy, first proposed under former Prime Minister Sir Keir Starmer in November, mirrors schemes in Scotland and European destinations. It is part of Prime Minister Andy Burnham's broader devolution agenda, aiming to give more autonomy to local leaders. Under the proposals, mayors and leaders of Foundation Strategic Authorities would need to outline by March 2028 how the revenue from the tax would be reinvested. A government source stated that local leaders and voters would decide what is 'right for their area.'

However, the plan has drawn criticism from hospitality leaders, who warn that it could increase costs for families and put jobs at risk. UKHospitality chief executive Allen Simpson estimated the average cost of a family holiday in England could rise by £100 to £120, citing fears that mayors might exploit the lack of an upper limit on the levy. 'Local government is struggling for funds,' he said, 'and devolving one tax-raising power will lead to overreach.' Conservative shadow housing secretary David Simmonds added that the tax would create a 'Labour double whammy' by adding to the existing 20% VAT on hotels.

Some local leaders have expressed concerns over the potential impact on tourism. Paul Swaddle, leader of Westminster City Council, warned that there would be 'precisely zero benefit' to his area if the tax was not shared with other councils. Meanwhile, John Chappell, who runs caravan parks in Skegness, Lincolnshire, said the additional cost could 'kill the industry off,' as many tourists already face high travel expenses.

The policy is not without precedent. Cities like New York, Amsterdam, and Rome already apply overnight charges to accommodation to fund local services, though many European cities cap these levies. In Scotland, local authorities can charge a visitor levy on overnight stays, with Edinburgh imposing a 5% rate capped at five nights. Wales is set to introduce a capped levy of £1.30 per person per night in April 2025, though local authorities will decide whether to implement it.

What remains unknown is the exact structure of the tax, including whether it will be capped, the percentage rate, and how the revenue will be distributed. The government has not yet confirmed whether the policy will be brought forward in Parliament.