LONDON – Tourists visiting London face a hefty tourism tax under proposals from London mayor Sadiq Khan.
The plans, endorsed by Khan at a cross-party event inside London’s City Hall on Friday morning, would see visitors paying up to 5% extra on their hotel bills.
Speaking to journalists afterwards, Khan said that tourists should contribute more to the city they visit.
“London is the number one destination for tourists in the world,” he said.
“Hotels do very well out of that. What we’re saying is when the tourists come they opt to pay a small level which will help improve the city.”
The levy is based on similar taxes imposed in cities such as Berlin where tourists pay an extra 5% on their bill.
Under Khan’s proposals local authorities would be given the option of imposing the levy, which would then be used to pay for infrastructure and environmental improvements in the city.
However, the plans were met with immediate fury by the hospitality industry.
“The British Hospitality Association regards any bed tax as absolute folly and asks the Mayor to think again,” BHA Chief Executive Ufi Ibrahim said.
“The introduction of a London bed tax will not only cost tourists more but harm already hard-pressed London hospitality and tourism businesses.
“A bed tax, however small, will discourage guests from staying overnight and reduce the amount they spend in the wider London economy, impacting shops and restaurants as well as hotels. Local bed taxes will make it even harder for British businesses to compete.”
Khan rejected the criticisms and insisted the tax was “not about clobbering anybody.” However, the proposals are part of a wider package of tax-raising measures designed by the London Finance Commission.
The commission propose that London should be given far more control over taxes raised in the city, including stamp duty and VAT.
London is responsible for only a tiny proportion of its taxes compared to other cities around the world. The Mayor can currently only levy a small fraction of council tax as well as a supplementary levy on the local business rate. However even these rates are capped by central government.
“Many of London’s global competitors enjoy much more control over public spending and services in their cities,” Khan said.
“New York keeps around 50% of the taxes raised in the city and Tokyo keeps 70%. However, if you factor in 100% of business rates, London only retains 7% of the funds raised in our city.”
Khan argues that the uncertainty around Brexit means that London should be allowed to take back control of money and powers currently in the hands of national and European government.
“The case for further devolution’s always been compelling but now it has a renewed sense of urgency,” he said.
“In the aftermath of Brexit we urgently need more control in order to protect London’s economy from the huge uncertainties and difficult times ahead.”
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