Taxes were levied on tobacco to reduce smoking. Taxes were increased on higher strength drinks to encourage a reduction in alcohol consumption.
So, what do we think the impact of charging tourists a tax to enjoy a break at the British seaside will be?
The left is always looking for someone or something to tax, often trying to make out we can have it all, whilst someone else pays the bill.
This makes the idea of a Tourist Tax or levy sound attractive. Councils and Elected Mayors can promise things to win votes locally, whilst getting people from elsewhere to pay the bill.
It relies on the false idea people will simply shoulder the extra costs and demand will not be affected.
Who will notice a few pounds extra on the price of their holiday? What difference will adding just £10 or £20 to a hotel room or charging a fee for driving in an area you don’t live in make?
These are false arguments. Any tax which increases the cost of doing something WILL impact demand and reduce spending in other areas.
The impact of price on demand is a basic part of economics. An increase in price will reduce demand. Last year Labour sought to deny this economic reality with their plan to impose 20 per cent VAT on independent schools.
They claimed it would raise £1.8bn a year based on demand staying the same, yet already we are hearing of independent schools closing and children switching to the state sector as the tax rise hits.
A tax which seemed an easy way of hitting “the rich” and promising things to others will not produce what is predicted. It is increasing costs to the state, alongside standing on the ambitions of many aspirational families.
A tourist tax will be no different in impact and could not come at a worse time for our hospitality industry.
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The Welsh Labour government is introducing a tourism tax which will hit tourist hotspots like Tenby
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They already face a double tax whammy thanks to Labour. In April, Business Rates bills are going up, as the hospitality discount is reduced from 75 per cent to 40 per cent.
Also, businesses dependent on staff to deliver customer service will be hit hard by the significant increase in Employers' National Insurance, known as the 'jobs tax'.
If you think adding another levy on top for customers will make no difference, think again. A tourist tax to stay at our seaside or simply to drive towards a popular attraction will be yet another cost prospective travellers will have to factor in when deciding where or if they can afford to holiday.
Traditional holiday areas like Devon & Cornwall have already adapted to the era of discount package holidays abroad, then the competition provided by low-cost budget airlines.
Competition is already intense on service, experience and price, with other destinations only a click away on an APP.
This means every pound in Tourist Tax will push down business margins or push up prices, thereby reducing demand to pay them.
All of this contributes towards hotels, pubs & holiday parks going out of business.
Torbay’s tourism industry is often described as Torbay’s “Golden Goose”, due to the economic gold it lays.
A tourist tax might provide one roast goose meal of public spending but cost us a lifetime of golden eggs feeding our economy.
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