In a report published on Friday, MPs have outlined how the UK government should consider allowing some devolved and local powers to raise a “tourism tax” or change income tax rates to reduce dependence on council tax. The report also recommends that devolution should “be the default option.”
The report also urges the new Secretary of State for Levelling Up, Michael Gove, to examine whether to devolve further powers over health and education, among others.
Clive Betts, chairman of the committee, said that devolving this financial power was “crucial” to the overall success of devolution.
Mr Betts added: “Michael Gove, as the new Secretary of State, should seize the opportunity to vigorously drive forward devolution across England.
He explained that this could “boost the provision of public services in cities and regions.”
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This could go towards the maintenance of “cultural amenities” and the “physical infrastructure used by tourists.”
A tourist tax is not an entirely new idea: Bath Council put forward proposals in 2017 and 2018. However, the committee’s report does outline a number of stumbling blocks for a tourist tax.
The first, according to the report, is that “not all areas attract the same volume of tourists and therefore revenue would be unevenly distributed across the country.”
Secondly, the report details that “a clear purpose is needed for the tax – is it to raise revenue or is it to offset the costs imposed by tourists?”
Taking the proposed tax rate from Bath Council, the report calculated that only approximately £420 million a year would be raised across England. This would be the case if £1 per overnight stay was introduced, but the report identified that this figure could become over £2 billion per year if £5 per overnight stay became the standard rate.
This report is part of the Housing, Communities and Local Government Committee’s relaunched enquiry to devolution in England.
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