Could a tourist tax be a silver bullet ?

On the face of it, charging tourists a few extra pounds on the cost of their hotel bill is an attractive and fairly painless way of raising some extra cash and we are already used to doing it when on holiday in Europe. From time to time there are calls here from tourist destinations to impose the tax and currently voices are being raised in support of the idea.

Most recently the leaders of Bath and North East Somerset Council and Cambridge have called for destination locations, such as theirs, to get extra support. But so far, the Government shows no enthusiasm for national legislation and have suggested Business Improvement Districts have the power to impose a local overnight levy.

Some years back, when I was Chairman of Bath Tourism Plus, we debated the pros and cons. As you might expect, hoteliers were none too pleased at the prospect of giving their guests a higher bill, whilst acting as tax gatherers for the Government. I don’t suppose their view has changed very much and they will be super sensitive to any additional increase in costs which could just tip the balance for someone deciding whether to come and stay in Bath or just nip in for a day trip.

In the early days of Airbnb there was some concern that landlords would avoid the tax altogether and therefore give them an unfair advantage, but it appears the system would now also draw them into the tax, if it ever came about.

One of the arguments put forward by residents, who have to contend with the impact of tourists, was that a tax might reduce the number of visitors. I had some sympathy with that view and put forward the proposition that our strategy should be to have fewer visitors, who stayed longer and spent more. For example, we looked at ways of promoting the rural parts of the district to give tourists something else to do when they had seen enough of the City centre and maybe stay an extra night.

But another major issue arising from the imposition of a tourist tax would be how the money would be spent. Early supporters wanted the funds to be ring fenced to improve the public realm, which seemed fair enough. But with the enormous pressures on public finances, how likely would it be that such a windfall would be spent on “nice to haves” when so many other vital services, such as the health and adult social care budgets, are creaking ?

Doubtless the subject of a tourist tax will continue to be discussed, but I suspect that destinations like Bath will have to cope without one for some time to come.