The Tourist Tax is Beyond Stupid

Even though I’ve been in and around politics for more than 40 years now, the stupidity and ideological idiocy of some politicians still never ceases to amaze me.

Across the political spectrum, everyone agrees that the hospitality sector is on its knees, with huge numbers of restaurants, hotels, pubs and B&Bs closing down due mainly to increased costs, but with ever increasing regulation playing its stultifying role too.

The only thing government and local authorities can do to help is to ease regulatory burdens and costs, and reduce taxes.

Labour, of course, plans to do the exact opposite. After hitting these businesses with NI rises and various other burdens, they now plan to go one better and give local mayors and councils powers to levy a tourist tax, arguing that the money raised will be reinvested in local economies. Of course it won’t. It won’t be hypothecated, so will just be used to plug gaps elsewhere in local budgets. Local businesses, who already pay sky high business rates, will be fleeced to mask the incompetence of local politicians.

Never having started or run a business – true in 99 per cent of cases – Labour’s national politicians are blind to the effect this will have. I’ve seen people argue that a £5 or £10 per night levy won’t make any difference to the number of people booking a hotel. The elitism and lack of awareness involved in this argument is spectacular. People from the north of England on an average to middling wage already struggle with the cost of a weekend in London, where they’re likely to be paying in excess of £200 per night for a hotel. Think of a family of four going on holiday for a week in Bournemouth. At a stroke, their family has just got £35 more expensive. That won’t sound much if you’re on £50k a year, but if you’re on a lower than average wage, that may mean the difference between going on a week’s holiday and not doing so. Or it means you still go but you don’t spend as much on the local economy. Whichever way you look at it, the local economy will lose out.

The very name Tourist Tax makes people think that only foreign tourists will pay it. But it will affect all overnight stays. Seventy per cent of overnight stays in the UK are by UK citizens. Many of them are by businesspeople, travelling salespeople and the like. Their expenses claim just got more expensive, thereby increasing their employer’s overheads and reducing their profitability.

Ah, they say, but many European countries and cities charge an overnight stay tax. This is true, but most European countries charge a much lower VAT rate for hotel stays than the norm. In Belgium it is 6% compared to 21%. France is 10% VAT compared to the normal rate of 20%. In Germany the figures ate 9% and 19%. Out of the 27 EU countries, 25 charge a reduced rate. Only Denmark and the Netherlands are similar to Britain and charge the same.

Labour mayors say they will not charge more than 5%, but apparently under the suggested rules, councils in theory can charge what they like. This is a recipe for chaos.

And then in the same week, it is being suggested that the proposed Mansion Tax should be expanded to apply to properties worth £1.5 million or more. Wicked. It’s the modern-day equivalent of the window tax, which was introduced in 1696 and then abolished in 1851. It gave rise to the phrase ‘daylight robbery’. The Mansion Tax is a tax on aspiration and home improvement, all in the name of ‘taxing the rich’. If you live in the South East, you’re not considered rich if your house if worth £1.5 million. It’s perfectly normal. If you’re a Labour MP in a marginal seat in London or the surrounding counties, the introduction of this tax will lose you your seat. It’s unfair, unjustified and tantamount to lunacy.

Has it ever occurred to these people that the solution is not to put up taxes, it is to cut spending, which is getting out of control.

It was revealed today that the DWP will be almost doubling PIP payments to disabled people from £19 billion this year to £45 billion in 2030. This is totally unsustainable, but no politician can ever argue that payments to disabled people should be cut. By 2030 the number of people being awarded PIP will be 5 million – a 25 per cent increased in four years! Mad. Anyway, this is a subject for another day.