The Government has commissioned former Labour councillor, Sir Michael Lyons, to produce a report on reforms to local government finance by the end of this year. In his interim report in December, he said he was 'interested' in introducing a new hotel tax. The tax would be on top of existing business rates and on top of VAT on hotel bills.
The hospitality industry, including the British Hospitality Association, the Tourism Alliance, Caterer & Hotelkeeper, Travelodge and local operators, are running a campaign against this new tax. Although details have yet to be published, based on hotel taxes in other parts of the world, a 10% per room per day levy is not uncommon. This could increase the cost of a typical family (two room) holiday by almost £100 a week.
Mr Dunne said: "I am very concerned about possible Government's plans for a new bed tax on local hotels and B&Bs. Tourists and visitors may seem an easy target, but they make a vital contribution to our local economy. As our economy in the Ludlow constituency struggled to diversify after Foot & Mouth, tourism has become an increasingly important activity.
Given the proliferation of cheap flights to Europe and the price sensitivity of tourists, hotels in Shropshire could potentially lose a significant amount of business from a bed tax. Hotels already pay business rates and VAT, it would be unfair to tax them a third time.
"Local government finance certainly needs reform given the way that John Prescott and Gordon Brown have forced up Council Tax bills. But destroying jobs and damaging the local economy through a bed tax is not the answer.
