England needs tourist taxes
Researcher
The mayors make the case
At our most recent ‘Meetings with Mayors’ event, held in Liverpool during the Labour Party conference, Greater Manchester Mayor Andy Burnham became the latest to tell Policy Director Dr Simon Kaye that he wanted to see his Combined Authority given the power to levy a ‘tourist tax’ on overnight stays.
This echoed the case made by Liverpool City Region Mayor Steve Rotheram in conversation with us three months ago as part of the same series, and indeed the letter published shortly before this calling for these powers and co-signed by both Mayors, along with the Mayors of London, the North East, the West Midlands, and West Yorkshire.
The logic of the levy
The case for the tourist tax is simple. In a global city like London, which welcomes more than 20 million visitors a year, there is a constant need to maintain and improve the tourist infrastructure that makes London appealing to visit, and allows it to compete with other global cities. Streets need cleaning, there are increased security needs, and public transport is put under greater stress.
Whilst there are a number of existing ways to fund this investment, and local residents certainly benefit to varying degrees from tourism, a tourist tax offers a way to generate the revenue without putting additional pressure on already stretched local budgets. Funding this investment with a modest levy charged on overnight stays enables increased investment, a clear narrative of how and why the revenue is collected and spent, and is already incredibly common globally.
Comparable and competitor global cities such as New York City, Paris, and Berlin all have a form of tourist tax, and in Italy you will pay a tourist tax on overnight stays in most of the major cities. And England is not just an outlier on the world stage for not having the mechanism – both Scotland and Wales have passed bills within the last two years enabling the introduction of tourism taxes, and Edinburgh will do just that from spring 2026.
One small step for fiscal devolution
Critics rightly note that these levies generally raise fairly modest amounts – with NYC’s $725m raised last year accounting for roughly 1% of its total tax revenue, and Paris’s €118m intake in 2023 making up a similar 1.3% of its annual revenue. And yet… a journey of a thousand miles begins with a single step.
Whilst the revenue is modest compared to overall requirements and other sources, a tourist tax would represent a (very modest) step towards greater fiscal devolution in one of the most centralised countries in the developed world.
The Greater London Authority estimates that a tourist tax could raise somewhere between £77 million and £240 million per year, which could be invested into London's tourism infrastructure, helping to make it more attractive to visitors and so increasing revenue in a virtuous cycle. Evidence from other cities suggests tourist levies do not deter visitors; indeed, reinvestment in infrastructure improves the offer for tourists and more than offsets the additional cost.
Time to make it happen
Central government has long resisted giving English cities the power to introduce tourist taxes, wary of industry backlash, administrative costs, and a more complex tax map. But with devolved nations moving ahead, international examples proving the model, and England’s mayors united in their call, the case is becoming unanswerable.
Recent reports suggest that this issue is gaining traction in Westminster. Let us hope that this momentum is translated into results. The ability to levy a tourist tax won’t transform local finances, but it would show that devolution in England is starting to mean something.