Civil servants at the Ministry of Housing, Communities and Local Government must have had steam coming out of their ears last week, with two major announcements landing within days of each other.
The first was the decision to pause local government reorganisation. This is a policy that many councils, including ours, never wanted, but which has already proved extremely costly.
The second announcement, however, was met with rather fewer hurrahs and certainly left those working in hospitality scratching their heads and asking: why now?
The Government’s new Overnight Visitor Levy (OVL) will give mayors the power to introduce a tax on overnight accommodation. And despite the pages of information published last Thursday, some of the details remain remarkably fuzzy.
We are not completely sure which types of accommodation will be covered. Hotels, B&Bs, serviced apartments and short-term holiday rentals appear to be in, while campsites and youth hostels are likely to be out. Ultimately, it will be for individual mayors to decide.
We do know that the levy will not be a flat fee. Instead, it will be a percentage of the accommodation cost.
A flat fee would have disproportionately hit caravan parks and other budget accommodation which operate on high volumes but low margins.
Collection will be the responsibility of hotels and other accommodation providers themselves. We are assured that this will be done through a simple self-assessment process. I remain sceptical about the word ‘simple’.
Scotland already operates a visitor levy, and the experience there suggests that collecting the money is far from straightforward. It creates an administrative burden, which has to be absorbed by the business.
The levy is being presented as optional. Perhaps some mayors will choose not to introduce it in the first year or two. But what happens when local government finances become even tighter?
My fear is that, within five years, government funding will take account of the fact that an area “could” have raised money through an OVL. At that point, what is technically an optional tax becomes a tax almost impossible to do without.
The Government says that the OVL will bring us into line with other European countries.
That is true, but it is only part of the story.
What many of those countries do not have, almost without exception, is a VAT rate on hospitality as high as our 20 percent.
There is also an important point to note here too.
Some of the cities that operate tourist taxes are actually trying to reduce visitor numbers because they are struggling to cope with overtourism.
That is hardly the position we find ourselves in.
I have long argued that tourism should be a growth opportunity for our area. It creates jobs, including those all-important first jobs for young people. It supports our town centres, our village shops and pubs, our heritage sites and, of course, our hotels and B&Bs.
We should be making it easier and more attractive for people to visit East Hampshire, not putting another charge on the cost of doing so.
We need to be growing tourism, not taxing it.
Pictured above - Chawton House - one of East Hampshire's many tourist attractions.
