Proposed holiday tax could threaten 33,000 jobs, industry warns
New proposals to introduce a tourist levy in England could deliver a £1.6bn tax hit to consumers while shrinking the wider economy and reducing employment, according to UK Hospitality.
Using evidence compiled by Oxford Economics, the report suggests that a 5% holiday tax on accommodation would reduce UK GDP by £2.2bn by 2030, while ultimately costing the treasury £688m due to weaker demand.
The report also forecasts a £1.8bn drop in tourism spending, potentially leading to the loss of around 33,000 jobs in the hospitality sector.
Overall investment is also expected to take a hit, with businesses projected to cut £101m in direct spending as demand softens.
Allen Simpson, chief executive of UK Hospitality, commented: “The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive, and decimate tourism. There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs, and taxi firms, the impacts are stark and indiscriminate.
"Taxes up, jobs lost, and our high streets hit once again. Holidays are for relaxing, not taxing. The Government should keep it that way and stop the holiday tax.”
He added that Oxford Economics had examined alternative scenarios in its modelling, including a 5% levy on accommodation and a £2 levy per person per night.
"All scenarios result in a reduction in GDP, tourism spending, nights spent in accommodation and total jobs."
Industry stakeholders echoed these concerns, warning that higher costs could push consumers towards international travel, harming domestic tourism.
“Holidaying in the UK creates jobs, drives investment and boosts local businesses. A holiday tax will mean people take fewer UK holidays, resulting in less investment and fewer jobs, often in areas where there are few alternative employment opportunities," said Simon Palethorpe, CEO of Haven.
“In the UK, visitors are already paying double the VAT rate of the most popular overseas holiday hotspots. The UK is a great place to visit, and we should be encouraging people to do so, not adding extra taxes.”
Image Credit: Stevebidmead on Pixabay
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