Mayors and local leaders across England are set to receive new powers to introduce a tourism tax on overnight visitors, under government plans that would allow them to set the fee as a percentage of accommodation costs and reinvest the proceeds in local services.
The measure forms part of a wider devolution settlement intended to give regional authorities greater control over funding and policy. Under the proposal, local leaders would determine the rate of the levy themselves, applying it to the cost of a stay rather than imposing a flat charge. The revenue raised would then be directed towards services in the area where it is collected.
The plans have been welcomed by Jim McMahon, the Oldham MP and devolution minister, who described the tourist tax as a question of «proportionality and fairness». His backing signals government support for giving England's mayors fiscal tools that are already used in various forms in other countries, where visitor levies help fund infrastructure, cultural attractions and environmental upkeep.
However, the proposal has drawn criticism from opponents who warn it could cause «irreparable harm» to the tourism industry. Critics argue that adding a percentage-based charge to accommodation bills risks deterring visitors at a time when many hospitality businesses are still recovering from the economic shocks of recent years. The concern is that higher costs could push travellers towards destinations without such a levy, particularly in a competitive international market.
The debate reflects a broader tension in English devolution policy between granting local authorities more financial autonomy and the potential economic consequences of new taxes. Mayors have long argued that they need independent revenue streams to invest in transport, skills and public services without relying solely on central government grants. A tourism levy would provide one such stream, but its impact would fall directly on visitors and the accommodation sector.
Supporters of the plan point out that similar schemes operate successfully in cities such as Paris, Rome and New York, where tourist taxes help maintain the very amenities that attract visitors. They argue that a modest percentage added to a hotel bill is unlikely to deter travel, while the funds raised can improve the visitor experience and support local communities that bear the costs of tourism, from waste collection to public transport.
The government has not yet confirmed the full details of how the levy would operate, including whether there would be a cap on the rate or exemptions for certain types of accommodation. It is also unclear whether the power would be extended to all mayoral combined authorities or offered on a case-by-case basis. Local leaders would likely need to consult residents and businesses before introducing a charge.
For England's mayors, the proposal represents another step in the gradual transfer of fiscal responsibilities from Westminster. If implemented, it would allow regions with high visitor numbers — such as Greater Manchester, the West Midlands and parts of the South West — to capture some of the value generated by tourism and reinvest it locally. The outcome will depend on how the plans are finalised and whether the tourism industry's concerns are addressed in the detailed legislation.