Be careful what you wish for

It’s almost exactly a year ago that I asked in these pages whether a Tourist Tax could be the silver bullet which would provide a relatively painless source of funding to be used for a variety of purposes. That article was prompted by calls in favour of a levy from the leader of Bath and North East Somerset Council and his counterparts from local authorities in other parts of the country.

Now a new Prime Minister has passed this hot potato into the hands of the Mayors of places like the West of England and given them the responsibility for setting the level of the tax, with no cap. Of course it’s not just a Tourist tax, it’s a tax on everyone staying overnight, so will impact business travellers too.

I have a range of concerns about this proposal. First up is that on one reading this is devolution at its best. On the other hand, it will create a piecemeal approach with different levies imposed across the country. Early suggestions are that it will land at around 5% of the cost of a stay, but some Conservative and Reform Mayors have said they won’t adopt it at all. That would give some areas a potentially crucial advantage in what is an extremely competitive market. Margins are tight and every penny counts.

Another point of concern is that it looks as though the funds raised will be held by the Combined Authority, so it will be vital that a system is set up to ensure we get our fair share of the proceeds. That may not necessarily be straightforward and arguments may be made about priorities for the sub-region as a whole.

The collection process will be another headache because you can be sure that proprietors will be none too pleased to become unpaid tax collectors and there is bound to be an additional administrative burden for them to bear. Our Council says it wants to work closely with the sector on the detail to ensure any scheme is straightforward to run and that the levy is set at a level that raises meaningful funds without discouraging visitors. That may be more tricky than it looks.

Whatever level the tax is set at, another complex issue which will need to be addressed is what to do with the money ? Early supporters of a Tourist Tax in this area wanted the funds to be ring fenced to improve the public realm and make the place more attractive for visitors and residents alike. But these days there is so much pressure on budgets that I seriously doubt “nice to haves” will do very well in the competition for limited resources.