UKHospitality proposes ‘holiday bonus’ amid concerns over holiday tax

UKHospitality has urged government to implement a ‘holiday bonus’ instead of a holiday tax.

The industry trade body argued that a holiday bonus scheme would incentivise tourism and support hospitality, as it would mean that devolved central government revenues would be passed onto local authorities based on how many visitors it receives, similar to the prime minister’s plans for income tax and business rates.

The proposal comes amid concerns that the holiday tax or visitor levy, at a proposed rate of 5% of the accommodation fee, would cost 33,000 hospitality jobs, reduce national GDP by £2.2b and cost a family of four going on holiday an additional £100, according to calculations by Oxford Economics.

Last week, the Cabinet Office published its Rewiring the State policy paper, which had plans for every area in England to have a strategic authority in place by 2028, thereby giving every authority the power to introduce their own holiday tax.

Allen Simpson, chief executive of UKHospitality, said: “As we warned would be the case, proposed holiday tax powers for mayors are being swiftly expanded to every strategic authority in England.

“It’s clear the government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost of living crisis.

“I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs.”

He added: “The solution is simple. Treat hospitality the same as every other sector. Instead of devolving taxation powers, devolve central government revenues to local authorities through a holiday bonus instead.

“Rewarding local authorities with fixed revenue per visitor night, for example, incentivises tourism and drives economic growth, rather than costing jobs, deterring visitors and making family holidays more expensive.

“The cost of lost VAT and increased benefits through reduced economic activity and employment will in many areas outweigh the revenues raised by a tax. A holiday bonus is the right kind of devolution – more revenue and control for local communities, without the lost jobs caused by a holiday tax.”

Previous polling of more than 10,000 adults across Great Britain for UKHospitality, in partnership with Butlin’s, Haven and Hilton by Stack Data Strategy, showed that one in five Brits would be opposed to booking a holiday in England as a result of any increase to the cost of a break from the holiday tax.

Last month, the All-Party Parliamentary Group (APPG) for Hospitality and Tourism called for “significant safeguards” to be introduced before applying a visitor levy on overnight accommodation.

Edinburgh became the first city to introduce a comprehensive, council-enacted visitor levy in the UK on 24 July, as guests staying in overnight accommodation across the Scottish capital will be subject to a 5% visitor levy.

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