Migrant hotels will be exempt from Andy Burnham‘s tourist tax on hospitality after the Prime Minister was accused of raiding struggling Brits with an unlimited ‘overnight visitor levy’.
Earlier this week, the Prime Minister gave his favoured regional mayors the power to impose an unlimited ‘overnight visitor levy’ on stays in hotels, B&Bs and holiday lets in England.
And despite objections, Mr Burnham ruled that the tax would be a percentage of accommodation charges rather than a flat fee and would not be capped, with Labour-run areas likely to set it at 5 per cent.
At the time, a furious business group dubbed the move a ‘kick in the teeth’, warning it would put tens of thousands of jobs at risk while costing holidaymakers an estimated £1.6 billion.
Now, the Department for Housing, Communities and Local Government has revealed the controversial uncapped levies would not apply to taxpayer-funded migrant hotels because they are classed as ‘temporary accommodation’.
The move has sparked fury within the hospitality industry, with insiders suggesting the exemption created motivation for hotels to accommodate asylum seekers rather than paying guests.
Meanwhile, the Conservative Party has lambasted it as ‘utterly outrageous’ that hard-working families wanting a British holiday would be hardest hit.
People visiting relatives in hospital could also face being hit with the tax despite not being tourists.
Migrant hotels will be exempt from Andy Burnham’s tourist tax on hospitality after the Prime Minister was accused of raiding struggling Brits with an unlimited ‘overnight visitor levy’
Pictured: The Bell Hotel, a former migrant hotel which was a the centre of anti-migrant protests last year
Chris Philp, the shadow home secretary, said: ‘It is utterly outrageous that families saving up for a break and struggling hospitality businesses will be hit with another tax, while hotels being used to accommodate illegal immigrants are exempt.
‘British taxpayers should not be treated as a cash machine as asylum hotels get special treatment.
‘Labour must explain why they think ordinary families should pay this tax but the asylum system should not.
‘The answer is not another stealth tax on British families. We need to deport all illegal immigrants which would allow us to end the farcical hotel use entirely.’
It comes as the Government are trying to bring an end to asylum seekers hotels by housing migrants in privately rented accommodation or former military bases.
Currently there are 160 migrant hotels across the UK, while a further 73,068 are housed in other forms of accommodation funded by the taxpayer.
It comes amid furore with Andy Burnham as he was accused of targeting struggling families with the new holiday tax.
According to Oxford Economics figures cited by UK Hospitality, assuming the impact of a 5 per cent levy is fully realised by 2030, the impact on the economy and consumers would be stark.
Despite Labour’s mayors raking in millions to fill town-hall coffers, Oxford Economics believe the move would see a reduction in tax receipts for the Treasury of around £688million, a loss of £101million in direct investment from hospitality and tourism businesses, 11.9million fewer nights spent in accommodation and 33,000 jobs lost thanks to an overall £1.8billion cut in tourism spending.
If a family paid £2,000 to stay in a hotel room or rented cottage, a 5 per cent tax would add £100 to the cost of their break.
The charge will be set as a percentage of the accommodation cost in hotels and guesthouses, not including food or drink.
Shadow Chancellor Andrew Griffith told the Daily Mail: ‘Just days ago, Andy Burnham said his was a “cost of living Government”. Now he is launching another tax raid on hardworking families.
‘His tourism tax will hammer the hospitality industry – which has already taken a beating from Labour’s business rates hikes, jobs tax and employment red tape – driving up the cost of the family holiday and discouraging people from holidaying in the UK. The Government’s own consultation shows people don’t want this tax. But Labour want more money to pay for more benefits.’
Tina McKenzie, national chairman of the Federation of Small Businesses, said: ‘Imposing an uncapped visitor levy in England is a kick in the teeth for the hospitality industry, at a time when small businesses are dealing with a deluge of cost rises.
‘Allowing levies to be brought in as an uncapped percentage rather than flat fee is hugely disappointing.’
Allen Simpson, chief executive of the UK Hospitality trade body, said: ‘If you only devolve one tax-raising power, local mayors are going to pull that lever till it snaps.’
He told BBC Radio 4 that holidays in the UK were already more expensive than in other countries because of Britain’s 20 per cent VAT rate, and that tourism taxes in the likes of Paris, Rome and Berlin are capped. Travel association ABTA said the move would ‘further damage the competitiveness’ of local tourism, while Whitbread, which owns Premier Inn, called it ‘hugely damaging’.
Mr Burnham introduced the UK’s first holiday tax when he was Greater Manchester mayor, imposing a £1-plus-VAT city visitor charge per room, per night in 2023 while his close ally Steve Rotherham set a £2 rate in Liverpool last year.
A 5 per cent charge took effect in Edinburgh at the start of the summer, for stays of up to five nights, while a visitor levy of £1.30 a night is coming to Cardiff in April.
But the plans announced by the Government yesterday go further, giving England’s 14 regional mayors the power to introduce an uncapped levy from 2028.
Popular areas such as the Cotswolds, which do not have a mayor, will be given the powers to charge after a future reorganisation of local authorities.
A No 10 spokesman said: ‘The fundamental principle behind this is that we trust local leaders to make decisions for their areas. That’s why we’re shifting power out of Whitehall and giving communities more control.’
Asked if she accepted the move would hit low-income families, Communities Secretary Angela Rayner said: ‘This is an opportunity for those areas to celebrate the tourism that comes to their areas, but then redirect that into their local area.’
The Daily Mail has approached the Ministry of Housing, Communities and Local Government for comment.
