The British Hospitality Association (BHA) has hit out at controversial plans by the mayor of London to consider the introduction of a bed tax as part of proposals to devolve a broad range of powers from Whitehall to the capital.
An independent report published today by the London Finance Commission will propose the plans for devolvement.
A spokesperson for the mayor, Sadiq Khan, said: "This includes recommending a consultation on a tourism levy, something the mayor currently does not have the power to introduce, but which is already operated in international cities such as New York, Paris, Berlin, Rome and Amsterdam."
Despite what is expected to be widespread opposition from the hotel sector to the imposition of a bed tax, the mayor was said to "fully support the hospitality industry and its crucial role in supporting London's economy".
Ufi Ibrahim, chief executive of the BHA, described a bed tax in London as "absolute folly" and said that it would add additional costs for tourists, as well as harm already hard-pressed hospitality and tourism businesses, making it even harder for them to compete with overseas operators.
"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. Tourists in the UK already pay the most tax in Europe and the World Economic Forum currently ranks the UK 140 out of 141 countries in terms of tourism tax competitiveness.
"The UK's rate of tourism VAT is already twice the European average and, although some European countries have local tourism taxes, they all enjoy a lower rate of tourism VAT so that any negative impact is offset."
Past plans to introduce a bed tax in York, Edinburgh and Cornwall have failed, primarily because of concerns that it would drive guests away. Earlier this month, Bath City Council mooted the idea of a bed tax, but would be wary about becoming the first authority to do so.
The introduction of a bed tax has previously only been possible through the introduction of central government legislation.
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