Proposed bed tax for London would feature in a devolved London government
Full details of the London Finance Commission's proposal for the devolution of power from central government to the capital, including the levying of a bed tax, have been published.
The mayor of London, Sadiq Khan, has endorsed the findings of the Commission's report, which he asked to be drawn up following last year's vote to leave the European Union. However, the British Hospitality Association (BHA) described the recommendation of a bed tax or tourism levy as "madness".
The findings intend to bring London, which receives 74% of its funding from central government, in line with other global cities by allowing the capital greater control over a wider range of taxes. New York receives 31% of its funding from central government, while in Paris it is 17% and 8% in Tokyo.
Khan said giving London more control would allow the capital "to manage the current economic uncertainty in the aftermath of the EU referendum" in order to protect jobs, growth and prosperity for the future.
"Now is the time for the government to seize the moment and unleash the spirit of devolution seen in other parts of the UK the capital can continue to drive the UK economy for decades to come."
The key recommendation of the Devolution: a capital idea report' are:
• A " modest tourism levy" which operates in cities such as New York, Paris, Berlin, Rome and Amsterdam and would be used to promote tourism in London.
• London's government should be assigned a percentage of Londoners' income tax yield.
• A proportion of London businesses' VAT yield should be devolved to the capital's government.
• The operation and setting of council tax, business rates and stamp duty should be devolved to London.
• The apprenticeship levy, due to be implemented this year, should be devolved to London.
• The devolvement of air passenger duty (APD) raised in London.
• London's share of the soft drinks industry levy should be retained within the capital, with a view to devolve it fully. In the longer term (after 2020), the capital's government should also consider other health-related taxes, including a sugar sales tax and a saturated fat tax, to be devised and managed by London government.
Ufi Ibrahim, chief executive of the BHA, said: "The BHA urges the mayor to stop the madness of introducing a tourism levy. Gouging tourists does not fit with the idea that London is open for business.
"A tourism levy will harm already hard-press London hospitality businesses and discourage guests from staying overnight and reduce the amount they spend in the wider London economy."
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