London could soon introduce a tourist tax

Following the introduction of tourist taxes around the world, from Japan to Spain and Italy, and even to Manchester, London is now the latest city debating whether or not to charge visitors a little more when they come to the British capital.

The idea of a tourist levy applicable in London was discussed at the recent Centre for London annual conference, an event which asked, among other questions: “how do we grow London in an inclusive, sustainable and successful way?”

Learning from Manchester’s experience

One answer, with cross-party voices generally in favour, is the introduction of a tourist tax. London’s Mayor, Sadiq Khan, said he would be “happy to look into” imposing a fee on tourists staying in London’s hotels, but was keen to wait for evidence from Manchester’s trial tourist charge. Although UK local authorities do not have the powers to bring in tourist charges, Manchester, 340 km northeast of London, found a loophole and became the first English city to charge a tourist tax last year, levying the fee through hotel bills. It raised £2.8 million in its first year, which was spent on events, security and street-cleaning.

Khan said he would be taking into consideration Manchester’s experience, as well as that of other cities around the world. Barcelona, Paris and Venice are among the European regional and national capitals that have brought in similar fees.

A guide to tourist taxes in 2024

Potentially damaging 

Not all at the conference were enthusiastic. Dissent came from UKHospitality, a trade body representing hundreds of industry stakeholders, which said launching tourist taxes would be “extremely damaging” to the UK sector. Kate Nicholls, the body’s chief executive noted that “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 described the capital as ranking “poorly” among global tourists put off by its already high VAT rate, and warned: “The introduction of a tourist tax would only damage that further.”

Chris Hayward, the City of London’s policy chairman, said he liked the idea and a tourist tax was already something they were “looking at” for the so-called “City”, but pointed out the risk of “the opposite effect” with a tax feared to “drive those tourists and those people you want to stay in your hotels away”.

However, other conference attendees from across the political spectrum expressed general alignment with the proposal and suggested used for the fee, from increased access to public lavatories, to an injection for the capital’s night-time economy.