Britain is considering a proposed ‘tourist tax’ on Australian holidaymakers staying at campsites, hotels and bed and breakfasts.
British Chancellor Rachel Reeves is keeping an eye on taxes in a bid to raise an estimated $2 billion to shore up the country’s coffers as economic growth falters.
Finance Ministry officials are said to have carried out ‘modeling exercises’ to see the economic benefits of introducing the tax.
The new scheme would start at around AUD 2 per person at a campsite and rise to as much as AUD 30 per person at a five-star hotel.
But both residents of Britain and holidaymakers from around the world would have to pay the tax.
The ‘hotel tax’ would follow on from a tourist tax applied in France and the visitor levy proposed in Wales, which would be paid by visitors and collected by accommodation providers.
Chancellor Reeves declined to comment on the matter when asked by reporters about her current trade visit to China.
A Treasury spokesperson added: “We do not comment on tax speculation outside of budget events.”
Britain is considering a proposed ‘tourist tax’ on Australian holidaymakers staying at campsites, hotels and B&Bs
According to insiders, the British government is considering a move to impose a ‘hotel tax’ on tourists
The government hopes the tax will raise enough to support government spending, following a rise in government borrowing costs in Britain.
According to the TaxPayer’s Alliance, this move could raise about $2 billion a year.
One city in England already applies a tourist tax to overnight visitors.
In Manchester, the City Visitor Charge requires visitors to pay approximately AU$2 per room for each night of their stay.
In April 2024, officials revealed that the tax had raised approximately AUD 5.5 million in its first year.
The money was spent on street cleaning and marketing campaigns for the city, spokesman Kumar Mishra said at the time.
British hotelier Sir Rocco Forte, one of Britain’s most prominent businessmen, warned that the tax could damage the country’s tourism sector.
‘Travel and tourism is one of the most vital parts of the UK economy, with the industry contributing over £250 billion [AUD$495billion] per year to Britain’s gross domestic product and supporting 3.5 million jobs,” he said.
‘Apart from the very smallest businesses, everyone trying to make a living in this area is being hit by the government’s increase in National Employer Insurance, and the entire sector is suffering from the refusal to restore tax-free shopping for tourists.’
The measure would follow a previous tax imposed on visitors to Britain, which meant tourists can no longer reclaim VAT – roughly equivalent to Australia’s GST – on their purchases.
“This would be a pernicious new tax imposed on top of all other taxes. Britain is already not a cheap destination, and this could only put off price-conscious visitors, who will increasingly choose to go elsewhere,” he said.
The chancellor told reporters in China that her budget is “non-negotiable.”
“The fiscal rules I laid out in my budget in October are non-negotiable, and growth is this administration’s core mission to make our country better off,” she said.