Warberry Advisory

I get the appeal of a tourism tax. What’s easier than taxing someone else?

But when the majority of UK tourism is by those in the UK, it’s worth stepping back and asking a fundamental question: is this really the best way to deliver growth in every postcode and strengthen public finances?

Tourism is one of the UK’s most important industries. It sustains jobs, supports local businesses, drives investment and helps maintain services in communities that might otherwise struggle to thrive. Across many rural and island areas in particular, tourism is not simply another sector of the economy. It is a cornerstone of economic activity and employment.

Yet much of the discussion around a tourism tax appears to start from the assumption that visitors and tourism businesses are not already contributing sufficiently towards public revenues. The reality is very different.

The danger is that we focus on the easy option of creating a new tax rather than fixing taxes that have been failing businesses and communities for years. Business Rates remain a persistent concern across the tourism and hospitality sector, while repeated calls for VAT reform have highlighted the competitive disadvantages businesses face compared with many international destinations.

If government believes more revenue should be generated from tourism, then the primary objective should be to encourage growth in visitor numbers, visitor spend, and the range of experiences available. Growing the market increases economic activity, creates employment opportunities and ultimately generates additional tax revenues through existing mechanisms.

By contrast, increasing the cost of accommodation or visitor experiences risks sending the wrong message entirely. At a time when consumers are carefully weighing up their spending decisions, adding further costs may simply discourage trips, reduce spending or encourage visitors to choose alternative destinations.

The challenges being faced are not new ones, and they require long-term solutions. Creating additional taxes may appear an attractive short-term response to budget pressures, but it does little to address the structural issues which affect investment, competitiveness and growth.

We should focus on making ourselves an even more attractive destination to visit, stay, and spend time in. The more successful our tourism industry becomes, the greater the benefits for our economy.

Let’s not compound our already out of date tax system with another tax, but instead let’s look to support growth and fix or replace the tax levers we have rather than add another broken one.