Could London be the next city to introduce a tourist tax?

Metro

2 days ago

In many European cities, paying a tourist tax is nothing new. If anything, it's expected.
From Paris to Barcelona to Amsterdam, the majority of our favourite hotspots come with an extra fee, whether we pay it at our accommodation or the airport.
Its purpose is simple: to provide the city with money for things like general upkeep, sustainability initiatives, and an increased demand on public services.
And as many places grapple with the effects of overtourism, taxes are increasing, and new ones are being introduced. For example, Venice doubled its tax for daytrippers earlier this year, while the Azores implemented one on January 1.
Recently, there's been talk of London joining the club. Last month, the Centre for London released a report called Arts for All, urging the Greater London Authority to 'explore the implementation of a tourist tax' to help invest in the capital's arts and cultural scene.
Last year, Mayor Sadiq Khan voiced his potential support, too. In October, he told The Standard he'd be 'happy to look into' whether a tax for overnight stays would be feasible.
But, while the arts do need funding – the report says that physical engagement with arts and culture in London sits below or close to the national average – what would a potential tourist tax mean for the wider community, including daytrippers from the UK?
'Tourists are going to be more accepting of the tax if they can understand where it is being spent,' explains travel expert, Deepak Shukla, CEO of Pearl Lemon Adventures, a London-based travel and tourism company, to find out.
Essentially, if the money tourists pay goes towards upgrading infrastructure and transportation, as well as financing and upgrading major attractions, we might all get on board with it.
There's no denying London feels the effects of overtourism. Visitor numbers to the UK are on the up: VisitBritain estimates that there were 41.2 million visits to the UK for the full year 202, 1% up on 2019, with most of them heading to the capital.
London has also been described as the 'Wild West' of Airbnbs. In Westminster in particular, councillors said more than 10,500 homes were used as holiday lets, and residents claim that one mansion block close to Hyde Park hosts more guests per night than The Ritz.
With rent prices in the capital already eye-wateringly high, short-term lets only serve to make living in the city even more expensive.
London also has the most congested roads in Europe, with analysis by analytics company Inrix finding drivers in the capital spent 101 hours sitting in traffic in 2024.
Though there is some merit to the idea, Shukla adds that a tourist tax is 'not without its problems.'
He says that the success of a tax depends on various factors, with the volume of tourism being a big consideration.
Currently, around 30 million tourists flock to London every year. Should the same number still come with a tourist tax, it will ensure a steady flow of income. However, if the tax deters tourists, it could lead to fewer visits and less income than expected.
Another concern is London's competitiveness compared to other global locations. Currently, Spanish cities like Madrid and Valencia (which boast better weather than the UK) don't have a tourist tax. Neither do up-and-coming European city break destinations like Helsinki or Tallinn.
'If an additional expense like tourist tax is imposed, travellers may opt to visit places that do not have these costs, impacting London's tourism sector,' states Shulka.
Similarly, Mayor Sadiq Khan noted that the money raised would need to be strictly monitored. If it were spent elsewhere, with people not seeing the benefits locally or regionally, it wouldn't be fair.
He said: 'It's really important to give that reassurance to the [tourism] sector, because they've had a tough few years, particularly post-pandemic.
'If we can reassure the [tourism] sector that we can work on a scheme that benefits inward tourism, it benefits more tourists to come, I think they'd be supportive of it as well.'
Officials estimate that a levy could raise significant amounts of cash for local services and the tourism industry.
For example, should the UK follow in the footsteps of Paris, which charges visitors up to €16 per night in premium hotels, or Barcelona, which adds up to €4 a night plus a regional fee, an extra £240 million could be generated annually.
This is on the basis of adding a 5% tax to overnight stays, according to Euro Weekly.
In short, no. English local authorities can't introduce their own tourist taxes,it needs to go through Parliament instead. Legislation to Parliament would have to be introduced for this to happen.
However, some UK local authority areas, including Manchester and Liverpool, have established Business Improvement Districts (BIDs) which cover tourism-related businesses.
These are legal loopholes, and are operated by local organisations, meaning they can collect levies in their areas.
'If London were to impose a tourist tax, it would probably be similar to the charge on overnight stays currently implemented in places like Manchester,' says Shulka. So even though an overnight fee could be charged, day visitors are unlikely to be affected.
Like we mentioned earlier, to prevent overtourism, cities like Venice have imposed fees for day visitors. But in London's case, Shulka says the main motivation would likely be different, specifically generating funds to improve tourism infrastructure upgrades and city services.
Shulka adds: 'I think one of the reasons why day-trippers don't typically pay a tourist tax is that they spend only a few hours in the city and therefore use fewer public resources compared to overnight visitors.' Since they don't stay in paid accommodation, they aren't charged through the usual channels.
Finally, for day-trippers to be affected, Shulka states that policies targeting them would need to be implemented. This includes things like tourist passes, access fees or visitor registrations.
Over on Reddit, there's a huge discussion about the idea of a tourist tax, and as you would expect, the reviews are mixed. More Trending
Many Londoners are for a tax, making the point that they have to pay it in other European cities, so why not here? 'Some visitors are surprised when they find out they don't owe tourist tax,' one person adds.
'Yes please. And then ring fence that money to go back into benefiting the local economy. Some new trains for the Bakerloo Line would be nice! Or some new cycle lanes,' another says.
A Barcelona resident was also positive about a London tax: 'As a tourist, I wouldn't mind that extra fee.' They continued, saying that their Spanish city has it, and 'regardless of the real use of the money that it generates, it's not a barrier for tourists.'
Another tourist agrees: 'I would pay it gladly every time I visit London (and I try to do it a couple of times a year at least).
Others were a little more sceptical, saying they would support it if they could guarantee that the money would benefit Londoners. However, some were straight up against it, citing that hotels are 'already overpriced', so 'the answer isn't to drive them further away.'
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