by Visitors to London will have to pay a tourist tax under powers given to Mayor Sadiq Khan by the Chancellor.
Rachel Reeves, who will deliver her budget on Wednesday, has approved measures allowing English cities and regions to charge tourist fees, with the money used to fund local projects.
Mayors will be given the power to charge a “modest” fee to visitors staying in hotels, bed and breakfasts, guesthouses and vacation rentals.
It follows calls for action from regional leaders including London Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham.
Sir Sadiq said on Tuesday: “Giving mayors the power to impose a tourist tax is great news for London.”
“The additional funding will directly support London’s economy and help cement our reputation as a global tourism and business destination.
“It also shows what can be done when ministers work closely with mayors to give more powers to cities and regions.
“As we develop our plans for the levy, we will work closely with the hospitality and tourism sectors to ensure it delivers the greatest possible benefit to London and our outstanding businesses.”
Adam Hug, leader of Westminster City Council, also welcomed the plan but warned that the money would have to be “reinvested in local services” in the districts where most tourists arrive as funding for councils has been cut.
He said: “My borough has been campaigning for an overnight stay levy for many years. We have a daytime population of one million compared to a resident population of just over 200,000 and Westminster spends around £115 million a year to serve the visitor and commuter economy.”
“It is only right to ensure that a significant proportion of the revenue from an overnight stay levy is reinvested in the local services that the visitor economy relies on – that is, ensuring our streets remain clean and safe, and ensuring there is a welcoming environment for visitors to Westminster and London.”
“Any night-time levy scheme must have a clear link to protecting and improving local services, particularly given the decision not to fully address commuter and visitor pressures in the Government’s Fairer Funding Review.
“While this plan, as drafted, will allow mayors to raise and collect the accommodation levy, it is important that the government ensures that mayors share the revenue with local councils in their area to support these services, without which economic growth will suffer.”
Officials said the measure would bring English cities in line with other destinations around the world, including New York, Paris and Milan, which already charge a tourist tax.
The Ministry of Housing, Communities and Local Government said research showed “reasonable” fees had a “minimal” impact on visitor numbers.
The money raised will be invested in transport, infrastructure and the visitor economy to potentially attract more visitors.
Local government secretary Steve Reed said: “We are giving our mayors the power to harness this and put more money into local priorities so they can continue to drive growth and invest in these communities for years to come.”
The decision to give power to the mayors comes before Wednesday’s budget draft.
The plans will be the subject of a consultation running until February 18, which will examine, among other things, whether there should be a cap on the level of the levy.
