Tourist tax could raise £350m a year for London

A tourist tax on overnight visitors to London could raise more than £350m a year for the capital, according to new analysis.

This is significantly higher than previous forecasts, which suggested such a levy could raise up to £240m annually.

The latest figure from Central London Forward (CLF), which represents 12 central London local authorities, is based on a 3% levy on the cost of a room, whether a hotel or short-term let.

Mayor of London Sir Sadiq Khan received powers last year to levy a tax on overnight visitors, which he said would "directly support the capital's economy and help cement our reputation as a global tourism and business destination".

The analysis, seen by the Local Democracy Reporting Service (LDRS), shows the 12 CLF boroughs alone would raise £275m, with the remaining authorities yielding an estimated £77m.

This has sparked calls from the central boroughs to retain half of the additional income in order to mitigate the increased cost pressures of tourism.

Westminster could raise more than £95m by itself, according to visitor estimates, with Camden, Kensington and Chelsea, and Tower Hamlets all forecast to bring in more than £20m annually.

It has not yet been decided how any money raised from a tourist tax in London would be split between City Hall and local authorities.

Adam Hug, chair of CLF and leader of Westminster City Council, said central London boroughs "play a crucial role in ensuring the visitor economy grows and thrives".

The Labour councillor said the government should legislate to ensure that at least half of revenue raised by an overnight stay levy is kept by London boroughs "so we can continue providing the services London needs".

There are currently 196 hotels across in London either in planning, under construction or undergoing renovation. Together, these have the potential to deliver another 29,500 hotel rooms, according to the LDRS.

This is in addition to an average 2% increase in AirBnB listings in the capital every year, which suggests another 1,249 short-term lets going on the market in the next five years.

CLF said a percentage-based levy, as seen in Berlin, Edinburgh and New York, would be fairer than a flat per-night tax, which would see higher end and budget travellers paying the same fee.

A spokesperson for Sir Sadiq said the government was currently consulting on the design of the levy.

"Once they have responded, we will outline our plans for developing the levy in London, including how we will engage with London's local authorities and hospitality and tourism sectors, to ensure it delivers the maximum benefits for London," they said.

The Ministry of Housing, Communities and Local Government has been contacted for comment.

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