English Mayors Set to Introduce Tourist Taxes

Published: 26 November 2025 Wednesday. The English Chronicle Desk. The English Chronicle Online

English regional mayors are set to receive new powers allowing them to introduce an overnight tourist tax, a move the government says will strengthen local investment and support city-led growth. The initiative, announced by Local Government Secretary Steve Reed ahead of Wednesday’s Budget, marks a significant shift in England’s local revenue system and signals closer alignment with devolved policies in Scotland and Wales.

Under the proposal, locally elected mayors will be able to levy a small charge on overnight visitors, with the funds directed towards improving public services, enhancing tourism infrastructure, and supporting events that contribute to regional economic vitality. Reed argued that local leaders, more than anyone, understand what makes their cities and towns unique and are therefore best placed to allocate such revenue. He emphasised that without the authority and financial tools to generate and manage local funding, England’s potential for regional growth remains under-realised.

The announcement was welcomed by several high-profile metro mayors who have long advocated for greater fiscal autonomy. London’s Mayor, Sir Sadiq Khan, described the new powers as a positive step for the capital, saying the additional revenue could help reinforce London’s global reputation as a world-leading destination for tourists and business travellers. Khan also highlighted the significant investment needs of a city that attracts millions of visitors each year, noting that a modest levy could help fund improvements ranging from high-street renewal projects to transport enhancements.

Greater Manchester Mayor Andy Burnham echoed this sentiment and pointed to the substantial economic contribution that visitors make to his city-region—nearly two million tourists annually, generating around £9 billion for the local economy. Burnham said the proposed levy would offer a direct means of reinvesting in the visitor experience, helping to keep streets clean, expand late-night transport services, and maintain the cultural and hospitality assets that draw people to Manchester. He argued that ensuring a positive and memorable experience for all visitors is vital for sustaining long-term economic growth.

However, not all regional leaders are embracing the idea. Tees Valley’s Conservative mayor, Lord Houchen, made clear he would not be taking advantage of the new powers. He expressed firm opposition to introducing a tourist tax, suggesting it would be counterproductive for regions seeking to attract more visitors rather than deter them. Houchen pledged that Teesside, Darlington and Hartlepool would remain exempt from such levies for as long as he remains mayor, saying simply: “Thanks, but no thanks.”

The hospitality sector also voiced strong concerns. Kate Nicholls, chairwoman of UKHospitality, described the move as a “damaging holiday tax” that could ultimately cost the public up to £518 million. She argued that any additional charge would likely be passed directly to consumers, potentially driving inflation and undermining the government’s stated aim of reducing living costs. Nicholls warned that the impact would not fall solely on international visitors but on domestic travellers, including families, business visitors, and even patients staying overnight for medical appointments.

Her concerns were echoed by Russell Imrie, president of BWH Hotels GB, who said the tax could make British hotels less competitive compared with European rivals. He warned that the UK should avoid becoming one of the continent’s most heavily taxed destinations, arguing that the financial burden would apply indiscriminately to all guests, not just holidaymakers. Imrie criticised the broad nature of the levy and urged policymakers to consider its wider economic implications.

While some local authorities welcome the potential revenue, the proposal has also exposed tensions between council leaders and metro mayors. Westminster City Council leader Adam Hug, whose borough includes some of London’s most iconic attractions, insisted that any revenue generated should be fairly shared between mayors and councils. Hug warned that if councils—who manage many vital services for tourists, such as street cleaning, safety and public amenities—are excluded from the allocations, the policy could fail to support the very infrastructure that underpins economic growth. He urged the government to ensure that revenue-sharing mechanisms are built into the final legislation.

Research cited by the government suggests that the impact on visitor behaviour will be minimal. Many major global cities already charge similar fees, including New York, Paris and Milan. Studies have shown that modest levies—such as £1 per night—have negligible effects on tourist numbers. Wales and Scotland are on track to introduce their own versions of the tax next year, with Wales confirming a £1.30 per night charge and Scotland adopting a 5% rate.

Supporters argue that the funds raised will offer tangible benefits. In London, projections suggest that even a £1 daily levy could generate around £91 million annually. Officials say this could help revitalise areas such as Oxford Street, which has faced criticism over declining retail quality and public realm issues, or fund extended transport services in cities like Manchester, where demand for later-running buses and trams continues to grow.

Opponents, however, caution that the economic climate remains fragile and that households are already under strain from rising living costs. They warn that any additional charge—however small—risks deterring visitors and further pressuring businesses within the hospitality and tourism sectors. The debate reflects a broader national conversation about taxation, cost-of-living challenges and the balance of local versus central government powers.

The government has launched a public consultation on the proposed tourist tax, open until 18 February. The process will examine potential caps on levy size, revenue distribution models and whether the tax should apply universally across accommodation types. The outcome will inform the final legislation expected to be included in forthcoming Budget measures.

As England moves closer to adopting a model long established elsewhere in Europe, the discussion continues to divide policymakers, industry leaders, and local authorities. Supporters see an opportunity to strengthen regional autonomy and secure sustainable funding for local improvements, while critics fear additional financial pressure on consumers and businesses.

The coming months will determine how the policy evolves, who ultimately benefits from the revenue, and whether England’s major cities can successfully use the new powers to enhance visitor experiences and drive long-term economic growth. As the consultation proceeds, the government insists that empowering local leaders is essential to unlocking the full potential of English regions. But whether the tourist tax becomes a catalyst for growth—or a burden on an already stretched sector—remains a central question for policymakers, industry stakeholders, and the millions of travellers who fuel the nation’s tourism economy.