Our most recent briefing investigates the tourist tax question<\/a>, but\u00a0there\u2019s\u00a0a bigger lesson here. If\u00a0England is going to follow the rest of the UK and introduce a local tourist tax, which nation should it follow?\u00a0<\/p>\nScotland allows councils to set their own percentage rate tourist tax\u00a0<\/p>\n
In 2024, the Scottish Parliament passed a law granting councils the power to set a visitor levy on overnight accommodation, and local authorities are beginning to implement them. From 2026 onwards, Edinburgh and Glasgow will each introduce a 5 per cent tax, while Aberdeen\u2019s will be 7 per cent. Other local authorities including the Highlands and Stirling are currently consulting on their own levy.\u00a0<\/p>\n
Wales only allows councils to charge a nationally flat fee per person\u00a0\u00a0<\/p>\n
The Welsh approach is different. From 2027, Welsh councils will be able to levy a nationally consistent fee of \u00a31.30 per person for hotel stays, and 75p per adult in hostels and campsites.\u00a0<\/p>\n
The Scottish tourist tax is fairer\u00a0<\/p>\n
There are three reasons why the Scottish tourist tax is a better model for England than the Welsh approach.\u00a0<\/p>\n
First, the Welsh tourist tax\u2019s\u00a0flat fee\u00a0design means it is extremely regressive. This in turn means it is difficult for the Welsh approach to raise significant revenues and provide\u00a0a strong growth\u00a0incentive. A\u00a0high\u00a0fee\u00a0would\u00a0not only\u00a0disproportionately fall on those on lower incomes\u00a0and consume a larger\u00a0portion\u00a0of their budget as a visitor\u00a0\u2013 it would also hit smaller and\u00a0low cost\u00a0accommodation providers heavier than\u00a0premium properties.\u00a0<\/p>\n
By contrast, the Scottish percentage rate approach means the tax bill is\u00a0closely linked\u00a0to ability to pay, as a\u00a0visitor\u2019s bill will vary according to the\u00a0cost\u00a0of their accommodation. Not only is this fairer,\u00a0it\u00a0means that\u00a0attracting in more\u00a0higher income visitors\u00a0and more luxurious properties\u00a0can provide substantial revenue\u00a0for the local authority.\u00a0<\/p>\n
Local autonomy is better than a flat rate\u00a0<\/p>\n
Second, the\u00a0Welsh flat rate means the tourist tax cannot be adjusted to local markets. Visitors to countries in practice visit a series of discrete local destinations \u2013 a holidaymaker who visits Wales will go to Pembrokeshire or the Brecon Beacons, rather than Wales in its totality. This means that the impact of tourism \u2013 and potential revenues from a tourism tax \u2013 are extremely localised.\u00a0\u00a0<\/p>\n
As a result, a flat fee may be far too high in a place with\u00a0very low\u00a0demand for tourism, while at the same time being far too low to raise the\u00a0optimal\u00a0revenue in a visitor hotspot.\u00a0\u00a0<\/p>\n
By contrast, the Scottish approach of local control over the levy allows councils to adjust their rates to local demand.\u00a0<\/p>\n
A tourist tax\u00a0is the first step towards\u00a0real fiscal\u00a0devolution\u00a0\u00a0<\/p>\n
The final element is the political consideration \u2013 given how difficult introducing a tourist tax will be,\u00a0what\u2019s\u00a0the point of introducing one that\u00a0doesn\u2019t\u00a0really work?\u00a0<\/p>\n
There has been opposition in Scotland to a tourist tax. But there has also been opposition to\u00a0Wales\u2019\u00a0tourist tax.\u00a0In light of\u00a0this,\u00a0policy in this area should aim to create a tourist tax that maximises the potential return to growth.\u00a0<\/p>\n
England has an incredibly centralised system of governance that makes untangling the local finance system while protecting local public services tricky.\u00a0That\u2019s\u00a0why the mayors are calling for tourist tax powers \u2013 a\u00a0relatively small\u00a0tax that can prove the principle that greater autonomy changes behaviour\u00a0<\/p>\n
There is a literal pay-off angle to this. A tourist tax must raise substantial receipts to be worth the political pain of introducing a new tax.\u00a0<\/p>\n
But there is a symbolic angle too.\u00a0The political pain means that the metro mayors must have\u00a0a strong\u00a0argument\u00a0for a new tax\u00a0and\u00a0use the receipts wisely.\u00a0If they choose not to\u00a0introduce\u00a0a tourist tax\u00a0at all,\u00a0that\u2019s\u00a0fine too. The test is\u00a0showing\u00a0good judgement\u00a0based on\u00a0local\u00a0conditions, not maximising receipts.\u00a0<\/p>\n
This is the real\u00a0prize of a tourist tax.\u00a0It\u2019s\u00a0not really about the\u00a0revenues.\u00a0It\u2019s\u00a0about\u00a0proving English local government can be trusted to control its own taxbase, and undermining the notion that all economic policymaking must be\u00a0controlled by\u00a0Whitehall.\u00a0Tourist taxes are the\u00a0first step towards fiscal devolution \u2013\u00a0that\u2019s\u00a0the\u00a0real\u00a0radical\u00a0idea.\u00a0<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"England\u2019s metro mayors want tourist tax powers. This might sound like a radical idea, but\u00a0that\u2019s\u00a0only because the British…\n","protected":false},"author":2,"featured_media":536910,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5008],"tags":[748,393,4884,8949,16,15],"class_list":{"0":"post-536909","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-england","8":"tag-britain","9":"tag-england","10":"tag-great-britain","11":"tag-tourist-tax","12":"tag-uk","13":"tag-united-kingdom"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/536909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=536909"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/536909\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/536910"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=536909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=536909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=536909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}