A Liberal Democrat MP representing Tiverton and Minehead in Somerset has urged the government to carefully reconsider plans for a new ‘tourism tax.’ The Labour government’s recent consultation on permitting mayoral strategic authorities in England to impose local overnight visitor levies—essentially extra charges on tourists staying overnight—is drawing mixed reactions.
This consultation, which ended on February 18, seeks input on whether such a levy could be introduced, how it might be collected, which accommodations it would cover, and if it should extend to areas like Somerset that lack elected mayors.
Rachel Gilmour stressed during a Westminster Hall debate on March 25 that while she supports devolving power to local authorities, the timing of a new levy is problematic. “Tourism is the lifeblood of our local economy,” she said, highlighting that on Exmoor alone, tourism accounts for around two-thirds of all jobs, generating £682 million annually through 8.4 million visitor days.
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However, she warned about the additional strain this tax could place on hospitality businesses already struggling with economic challenges and regulatory burdens. The levy would compel businesses to overhaul systems, adapt staff training, and manage new administrative complexities, especially taxing for small operators.
Gilmour urged the government to consider linking any tourism levy with a reduction in VAT to maintain competitiveness, proposing that revenues must be strictly ringfenced for reinvestment in the local visitor economy. She emphasized that such funds should not be redirected into general local authority budgets unless they directly support tourism strategy within the area that generated them.
The MP also raised concerns about rural communities, noting Somerset lost £21 million in ‘rural remoteness’ funding after the government’s fair funding review—which poses risks that non-mayoral regions may face disadvantages without balanced support.
Visitor spending extends beyond accommodation to pubs, shops, attractions, and transport, so any drop in tourism could have widespread economic repercussions. Gilmour commended the efforts of the Somerset and Exmoor local visitor economy partnership in coordinating tourism growth but insisted that any levy must support rather than undermine such initiatives.
Housing Minister Alison McGovern acknowledged that the UK is analyzing successful models from Europe and devolved administrations like Scotland and Wales, where visitor levies are already in use. She explained that well-designed levies help fund local services such as public transport, parks, and cultural heritage projects, with the principle that visitors fairly contribute to the upkeep of the places they enjoy.
McGovern emphasized that decisions on levies should rest with local elected mayors, who best understand their communities' unique needs. The levy must be fair and proportionate, ideally empowering leaders to foster economic growth while maintaining local accountability.
As discussions continue, the balance between supporting tourism’s vital role and introducing new costs remains a critical concern for Somerset and similar communities.