Local 'tourist tax' could bring revenue of £1 billion for region

Draft plans to hand town halls in England the power to impose local "tourist taxes" could leave the Westcountry in control of up to £1 billion in revenue, it is estimated.

Tax-raising powers are among elements included in a draft code published by an influential House of Commons committee, which it said could form the basis for a statutory relationship.

MPs also suggested that councils should be directly handed a share of income tax to bring them in line with powers granted to the Scottish government and proposed for Wales.

The committee said a legally-enforced code would "give local councils the ability to better shape their service to the needs of local people".

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Requiring the consent of local people – though not necessarily via a referendum – it could include the sort of tourist tax levied by many foreign cities on hotel rooms and other services.

Directing up to two thirds of national income tax takes to councils, in place of centrally-administered grants, would also give residents a clearer idea of where their money was being spent, it said.

Malcolm Bell, head of Visit Cornwall – the tourism arm of Cornwall Council – said Devon and Cornwall currently hands around one-third of its £3 billion in annual tourist income to the Treasury.

Mr Bell said freedom to raise existing taxes locally would be welcome but additional levies on a British tourist industry which was one of the highest taxed in the world would further damage competitiveness.

"We are the third-highest taxed industry in Europe – diners sitting down in France pay 5.5% in VAT, here they pay 20%," he added.

"When tourism does well the Treasury gets the money and the local authority picks up the extra costs, so if they get that settlement right it would be a positive move.

"Local sales taxes operate in place like the United States and its seems to be lower in places with more tourists but we need to see more details."