Warwick Lib-Dem's Oppose 'Bed Tax' (Warwick & Leamington Liberal Democrats)

Warwick & Leamington Liberal Democrats <info@warwick-leamington-libdems.org.uk>

Warwick Lib-Dem's Oppose 'Bed Tax'

June 1, 2006 10:00 PM

A recent government review of local government funding is considering a number of tax's targeted at tourists including a 'Bed Tax' on hotel visits.

Say no to 'Bed Tax'

These are argued for on the grounds that tourists benefit from many local services just as much as residents do - from policing to litter collection to transport - and that their presence also contributes to the cost of providing these services. As such, it would seem reasonable to impose a locally-levied tax on them to contribute to the cost of these services. However, Warwick Liberal Democrats would oppose such a move, for a number of reasons.

The tourist industry is highly competitive and, in Britain, extremely price sensitive. Britain already has the second highest rate of taxation on tourists of any European country - tourists contribute around £12 billion to the Treasury each year. And two separate studies have found that for every 1% increase in the cost of visiting Britain, the revenue generated by tourism drops by at least 1%. In addition to hitting visitor numbers, the tax could impose real burdens in terms of paperwork and administration costs, especially for small businesses.

It's not an extra burden that our tourist industry can easily take. Our tourism deficit (the gap between the amount Britons spend travelling overseas and the amount spent by visitors here) currently stands at over £17 billion a year, a rise of over 350% since 1997.

While bed taxes have been levied in many destinations around the world, these have often not been a success. In New York, a 5% bed tax was introduced in 1990, only to be repealed in 1994 after a sharp decline in visitor numbers; Italy dropped its tax after research revealed it cost more in administration than it collected.

While we understand the arguments in favour of such a bed tax, we feel that the likely harm to the local tourist industry makes it non-viable. Tourists already contribute a huge amount to our economy, both through spending and taxation. Furthermore, any drop in revenue generated from tourism would mean a drop in the amount of tax collected centrally by the Treasury, with the result that any apparent financial gain would be a false economy that amounted to little more than shuffling money around.