00Introduction
England’s lack of a local tourist tax makes it an international outlier. England is the only country in the G7 where national government prevents local government from collecting a tourist tax on overnight accommodation, and London is the largest city in the G7 without one. Scotland and Wales have recently introduced tourist tax powers for local government and risk leaving England behind.
The metro mayors are campaigning to change this in England and secure tourist tax powers. In England’s exceptionally centralised local government finance system, a tourist tax would support local economic growth by providing a financial incentive to support the visitor economy. If the tourist tax is proven to increase local economic growth, it would provide strong evidence for further fiscal devolution at a later date.
But the question of how to design a tourist tax is not trivial. To provide a strong incentive to support growth, a tourist tax must raise sufficient revenue to be worth collecting for authorities who can then change their behaviour to increase the number of overnight visitors.
This briefing tries to answer some of the initial questions a tourist tax raises for English devolution. It argues that a Scottish-style tourist tax would be more appropriate for England than a Welsh-style tourist tax.
The questions this briefing addresses are:
- How should a tourist tax be designed?
- Should a tourist tax rate be set locally or nationally?
- Which tier of local government should be responsible for the tourist tax?
- How should a tourist tax be collected from overnight accommodation?
- What should a tourist tax mean for the local government finance system?