Rural businesses unite against overnight visitor tax

More than 30 tourism and business organisations have urged the government to drop plans for an overnight visitor levy, warning it could cost jobs and damage rural firms.

The Country Land and Business Association (CLA) has joined the coalition in opposing proposals that would allow mayoral strategic authorities in England to introduce local charges on overnight accommodation.

The proceeds could be used to support transport, infrastructure and the visitor economy, although the final design and rate of any levy have not yet been settled.

Opponents argue that adding to the cost of domestic breaks would deter visitors and leave them with less money to spend in local businesses.

The coalition said the impact could extend beyond hotels and holiday lets to pubs, farm shops, campsites, attractions and other rural businesses reliant on tourism.

Farms that have diversified into holiday accommodation, glamping, cafés, events and visitor attractions could be particularly exposed, as many use this income to support the wider agricultural business.

Oxford Economics modelled several possible levy options for UKHospitality.

Under its most severe scenario, a 5% charge on accommodation was forecast to reduce UK gross domestic product by £2.2 billion and leave the economy with almost 33,000 fewer jobs by 2030 than under the baseline forecast.

The same scenario projected 11.9 million fewer visitor nights and £1.8 billion less tourism spending.

These figures are forecasts rather than confirmed outcomes, and the predicted impact was smaller under the lower-cost options considered.

CLA president Gavin Lane said: “A tourism levy sends entirely the wrong signal at a time when many rural businesses are already under significant financial pressure.”

The CLA said rural operators were already facing pressure from VAT, business rates, rising labour costs, weak transport links, poor digital connectivity and restrictive planning rules.

Lane also questioned the consistency of introducing another charge while pursuing measures intended to support parts of the hospitality and attractions sector.

“Increasing taxes via a visitor levy while at the same time reducing VAT on visitor attractions and business rates for pubs and clubs seems very poorly thought through and confusing,” he said.

Supporters argue that tourism places additional pressure on transport, public spaces and local services, and that visitors should contribute towards maintaining them.

The Local Government Association has backed the principle of an overnight levy, while calling for local authorities to have flexibility over how the revenue is spent.

The final structure and rate of any levy remain undecided.

The CLA said ministers should consider the effect on farms and rural estates that have invested in tourism to diversify their income.

“Rather than introducing new costs for visitors and businesses, policymakers should focus on creating the conditions for this vital sector to thrive,” Lane said.