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UK SMEs say no to tourist tax – here’s why

With increasing business rates, competition from Airbnb and a proposed city tax, small businesses are left wondering what’s next?

The idea of tourist tax certainly isn’t a new idea. Other European cities such as Amsterdam, Paris and Barcelona have been using the model for years and now some major UK cities such as London, Bath and Edinburgh thinking about introducing it.

The tax tends to be collected by the accommodation providers of the cities and charged at a per guest and per night rate.

And while many guests think it’s just a sneaky way for hotels to boost their profits, the money doesn’t go into their pockets.

Last month, the Mayor of London, Sadiq Khan called for a tourist tax for London, stating that he wants to ensure that tourists are contributing to the city. However, with ever increasing business rates and fierce competition from Airbnb, this proposal could add up to 5% on hotel bills, leaving a bitter in the mouths of guests and hotel owners.

Many small businesses fear that they may not be able to compete in an industry saturated with chains, that tourists may choose to go abroad instead of stay in the UK and that they will have to reduce room prices to accommodate.

Hoteliers in Bath have recently opposed plans to bring the tax to their city and have written an open letter to the council asking for the plans to be axed. So far, 20 hotel operators have signed their names on the letter, which states:

“We are concerned by the threatened imposition of a tax on visitors to Bath and North East Somerset who make a critical contribution to an economy on which 9,774 jobs in Bath and North East Somerset depend. Our industry plays a critical role in the promotion of Bath and making sure our guests have a great experience as they visit the many attractions our city and the wider area has to offer. As a result, a wide range of sectors including retail, entertainment and transport benefit from business generated by hospitality and tourism.”

Laurence Beere, hotelier and co-owner of the Queensberry Hotel, Bath believes that the proposals are unfair, asking the question “How is it fair to target one sector with a tourist tax when multiple sectors benefit?”

“As a business, we will already have to find a further £20,000 this year as a result of the increase in business rates imposed from April 2017. The idea that hotels will be able to collect a Bed Tax and pass this cost on to customers is simply ill conceived.”

Bath council decline interviews but issued a statement indicating that the proposed tourist tax was still being considered.

“As Bath welcomes such a large number of tourists … it is sensible to consider the potential for increasing the council’s income to support local services, invest in the local area and address the financial challenges it faces.”

“The idea of the original levy was to increase income and support investment in the city and surrounding area. The council has recently started to discuss the matter again with the government, and is exploring the feasibility with other local authorities.”

Plans for the introduction of a tourist levy for Edinburgh are currently in the negotiation stages, however, four out of five Scottish businesses are against the plans according to a Federation of Small Business (FSB) poll conducted last year.

However, not all small businesses are against the idea of a tax, Louise Clelland, co-owner of Edinburgh B&B, Millers64 said: “I am all for it as long as it is not a prohibitive amount and the taxes are spent in areas that improve the visitor experience and are not used to fill the gap in local services, which government cuts have created.”

Are you a hotelier or are you thinking of becoming one? How would a city tax affect you – let us know in the comments below.



Melanie Luff

About the author

Melanie Luff is an in-house journalist and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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