Are bed taxes fair and just?

By | Category: Travel rumblings

Bath – the Royal Crescent

In the past Edinburgh, Cambridge and London have all looked at the idea of imposing an accommodation tax on visitors. The idea is that local government would be able to raise additional revenue by charging a per person tax per night on hotel stays.

It is widely practised abroad with Venice, Rome Florence and just about every US city you can name charging an overnight tax. Even a town in the US state of Oregon with no accommodation has implemented such a tax in case it is needed!

Now Bath is the latest UK destination to be considering such a tax. Back in 2011, Fergus Ewing, the then Scottish responsible minister said that Edinburgh couldn’t introduce such a tax (it planned on £2 per person per night) because the right to do so hadn’t been devolved. If that view still persists then Bath would need Westminster approval.

Forgetting the legalities for a moment, is such a tax fair and equitable?

My answer would be no.

Edinburgh Castle: The city considered an accommodation tax in 2011

Such a measure is a tax on overnight accommodation not a tax on tourists or visitors. It is discriminatory as unless a method of taxing those that visit Bath on just a day visit only those that book overnight accommodation pay. What of those travelling on coaches, those that arrive by train or those that drive in? Will they be taxed?

The argument is that the tax will be small, something like £1 per person per night. One implemented though, it would be easy to raise that sum to £1.50 or £2 per person per night.

For a family of four on a long weekend break that could be £8 or £12. For a week’s tour it could be £24 or £28. For a twenty bedroom hotel with 80% occupancy, the extra cost charged to guests could be between £5,800 and £10,000 per annum.

Council officials wouldn’t need a PhD in maths to work out the additional revenue that the city could make.

According to the local tourist board, there are over 150 accommodation providers in the city and whilst many are B&B’s and guesthouses with just a few rooms, it is easy to see that this extra revenue could be quite a source of revenue for the city.

Cambridge has also considered a bed tax

The big question is at what tax rate would people stay away? At what tax rate would the coach companies plan on trips avoiding Bath?

If the money raised by bed taxes was ring fenced so that it was only spent to improve the tourist appeal then that would satisfy a lot of visitors. But how can you be sure? What is for tourist benefit and what is for the benefit of the locals? Keeping streets clean, filling in potholes, providing public toilets and maintaining green spaces benefit both visitors and locals so councillors could argue that the money would be spent on tourism. If you provide overnight shelters for the homeless could you argue that not having people sleeping on the streets makes the city more appealing to tourists?

In Venice, visitors often stay near the airport or in Mestre to avoid the accommodation tax. More people are staying outside Rome and then travelling in on buses or trains so that they don’t pay. In New York, people stay outside Manhattan where the taxes are lower.

Could it be that Edinburgh, Bath and Cambridge want fewer tourists and an accommodation tax is a way of discouraging visitors or at least overnight stayers?

Before any city seriously considers an accommodation tax, the fairness of it and the effect on both tourism and locals needs to be assessed.

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