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Government Says No To Bed Tax in a few hours

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Government Says No To Bed Tax in a few hours
Written by:

The sense of disbelief was palpable. A Government renowned for issuing reports into consultations and consultations into reports had reacted to the recommendation of another look at bed tax within a matter of hours.

The news all the hospitality industry wanted to hear arrived in an announcement from the Department of Communities and Local Government at around 2pm last Wednesday (21 March).

Responding to Sir Michael Lyons’s official report into local government funding, which was released at 9.30am that morning, Local Government Minister Phil Woolas said: “Sir Michael examines the case for a tourist tax. He concludes that there is not a strong evidence base for the introduction of such a tax. While he puts the case for a consultation on this issue, we are not, therefore, inclined to focus on this area. The Government does not intend to introduce a tourism tax.”

Bob Cotton, chief executive at the British Hospitality Association, which joined forces with Caterer on a “Say No To Bed Tax” campaign last year, described the decision as a “historic victory for common sense”.

Damaging

“We have consistently pointed out the difficulties of introducing a bed tax and emphasised how damaging it would be to the UK tourist economy,” Cotton said. “We are delighted that common sense has prevailed.”

Michael Prager, chief executive of CHE Hotel Group, agreed. “The chancellor has recognised that it’s more important to support the hospitality industry, which is a significant producer of jobs and foreign income,” he said. “It’s good to see an end to this uncertainty and the BHA and Caterer are to be congratulated on their proactive campaign.”

But the feel-good factor was tempered with anger at Lyons for proposing a consultation on bed tax, despite widespread opposition to the recommendation.

“It took the Government two hours to see sense yet Lyons couldn’t manage it in three years,” said Grant Hearn, chief executive of Travelodge. “I personally feel he has put the industry under needless pressure, but credit to the Government for a decisive rejection of it.”

Kurt Janson, policy director at the Tourism Alliance, agreed, claiming that the recommendation displayed Lyons’s “total lack of understanding of the UK tourism industry”.

“Rather than helping local communities, it would have simply provided even more of an incentive for UK residents to take their holidays overseas, increasing the country’s tourism deficit and condemning many seaside destinations to an even more uncertain future,” he said.

Lyons himself said he was not surprised by the Government’s immediate and complete rejection of the bed tax proposal.

“While I could see that it could be appropriate, there was no compelling evidence (in favour of the tax) presented to me,” he told Caterer. “I rather expected that some of the councils would have supported it and industry opposition was clearly an issue.”

Lack of detail

In response to industry criticism over a lack of detail in the proposals – for example the lack of definition over what “accommodation” meant – Lyons put this down to his lack of confidence in the idea. “If I had been confident that this was the way to go, the details would have been ironed out,” he said.

His reaction poses the obvious question – why propose something you do not fully support?

“I haven’t budged from my position that councils need to have more flexibility,” Lyons said. “It will be interesting to see if we come back to this at some point in the future. You can easily imagine circumstances where the tourist pressure is substantial enough on a community to justify a bed tax happening.”

It’s a defiant response, but it seems unlikely that bed tax will rear its ugly head again any time soon. But with further bad news arriving in the Budget in the form of the removal of Building Allowance and reduction in capital allowance, the industry should unite once againin opposition to some ill-considered proposals

Bed tax timeline

December 2005 Sir Michael Lyons issues an interim report into local government funding and reveals that a “bed tax” of 5-10% on an overnight stay – proposed by the Local Government Association – is under consideration.

April 2006 Caterer teams up with the British Hospitality Association, the Tourism Alliance and Travelodge in a campaign to Say No To Bed Tax.

June 2006 Conservatives and Liberal Democrats join the campaign.

July 2006 Caterer delivers more than 4,000 signed petitions from readers protesting against bed tax to Lyons.

December 2006 Lyons delays publication of inquiry until March.

March 2007 Tuesday 20 – Leak suggests Lyons will propose a bed tax. Wednesday 21 – Lyons proposes further consultation on the issue, but hours later bed tax is rejected by the Government.

Labour has ignored tourism industry

Bed tax plans ruled out

by Daniel Thomas

E-mail your comments to Daniel Thomas here.

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