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manchester canal view | accountingweb | Manchester acts as trailblazer for tourist tax
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Manchester acts as trailblazer for tourist tax

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With Manchester the first city in the UK to impose a tax on visitors, it remains to be seen what this means for the area and others that follow in its footsteps.

9th Aug 2023
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Manchester is the first city in the UK to have introduced a “tourist tax”, also referred to as the city visitor charge. Other cities such as Bath, Liverpool, Birmingham, Bath and London are also looking into introducing this. The devolved tax system has enabled Scotland, Wales and Northern Ireland to self-govern and as a result they are also considering the introduction of a tourist tax. In May 2023, Edinburgh submitted a bill, which if passed will result in the introduction of a tourist tax.

The tourist tax has been popular in European cities such as Barcelona, Venice, Dubrovnik, Bruges and Porto as it has helped to fund local infrastructure such as cleanliness and tourism initiatives including events and festivals. It has also been a source of revenue for local governments, with 21 out of 27 EU member states charging an occupancy tax on tourists for overnight accommodation, enabling them to become more independent.

Collection of the tourist tax

Since 1 April 2023, Manchester’s tourist tax has been a £1 charge added to the cost of a room per night. Business travellers are exempt, but will need to prove the purpose of their visit. This is being managed by the Manchester Accommodation Business Improvement District (BID). 

Currently, the tourist tax in Manchester is being collected from 73 hotels and serviced apartments located in the city centre that have a rateable value of £75,000 or more. If a tourist stays at an Airbnb, small hotel, hostel, or bed and breakfast they will not need to pay the £1 charge.

Boosting the economy

The tax is aimed at helping boost the tourist economy as the city recovers from the coronavirus pandemic, and it comes after accommodation providers voted to set up the Manchester Accommodation BID. Manchester anticipates raising £3m and aims to use this to enhance sightseers’ experience. Funds will be used to help run large events, conferences, festivals, marketing campaigns and for street cleanliness. 

Initial reactions

As with all new initiatives, there have been mixed reactions to Manchester’s tourist tax. According to a survey by Visit Manchester, 70% of visitors said they would be willing to pay a small fee to help fund tourism initiatives in the city.

Positives Negatives
The BID aims to create a more sustainable and thriving sector, helping to bring visitors from around the world to Manchester. The introduction of the tourist tax may create a negative perception of Manchester among visitors.
The BID will provide a platform for the accommodation sector to work together to promote Manchester as a destination and to attract more visitors. Increased costs, especially for budget-conscious travellers.
Help fund local infrastructure and tourism initiatives, as well as help the overall visitor experience. Lack of transparency around how the funds raised will be used by Manchester Accommodation BID.

Visitor levies

If the recently submitted Scottish Bill is passed, it will enable local councils to introduce a “visitor levy” and use funds to invest more in local tourism facilities and services. Unlike Manchester’s tourist tax, the levy in Scotland will be based on a percentage of the accommodation cost. The levy would be collected by the accommodation provider.

According to the Scottish Government, local councils will be required to consult with communities, businesses and tourism organisations before the levy is introduced, as well as consult on how any revenue raised should be spent.

The Welsh government have stated that they too are working on a proposal whereby local authorities will be given powers to introduce a visitor levy, in order to support investment in the tourism industry. The levy aims to encourage the preservation and celebration of local communities in a sustainable way. The government at this stage have stated that the visitor levy will be a small additional charge.

There are rumours that Belfast city council would like to introduce a tourist tax, but the government has not suggested that they are considering the introduction of a tourist tax.

The journey ahead

It makes sense that cities would want to introduce a tax to help attract tourism and promote events as a means of boosting the local economy, while also keeping the city clean. The pandemic along with global inflation has resulted in businesses facing greater challenges and the tourist tax can be used to help make areas more attractive for tourists. There seems to be little evidence to suggest that a tourist tax has led to fewer tourists visiting a destination.

However, will this be seen as another so-called stealth tax? Over time will the amount charged to tourists start to creep up? Is it fair that certain types of accommodation can be excluded from collecting a tourist tax? Will the tax be a deterrent for tourists? And how will local authorities monitor the effects on the tourism industry?

For the local businesses and communities, it is likely that they will want great clarity and transparency on the tax collected and how this is being spent. If an area is to provide events to attract tourism and the budget is exceeded, will local communities have to pay?

Each area across the world that has introduced a tourist tax has its own rules, exemptions and means of charging so it will be interesting to see how it develops in the UK.

Replies (4)

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By Open all hours
09th Aug 2023 14:55

If you state the purpose of your business visit as buying Harry Maguire apparently you get a refund.

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By Hugo Fair
09th Aug 2023 17:57

"The Welsh government have stated that they too are working on a proposal whereby local authorities will be given powers to introduce a visitor levy, in order to support investment in the tourism industry"
... so no more 'come home to a real fire' welcoming road-signs?

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By Postingcomments
09th Aug 2023 18:01

I guess I'll have to put the hotel costs through my business. Tax relief and then I don't have to pay the tax for visiting (and spending money in the city). Double bubble!

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By Halex
10th Aug 2023 20:38

But why limit it to the big cities? and why excuse AirBnB? No bad thing to ask the many visitors to this country to contribute as we all do when we visit their countries.
Having had a a few road trips round Europe this past 12 months I notice that in most of them you cannot enter any public museum for free, have to pay to use public toilets and are generally taxed for driving on their roads. What's the problem with charging visitors for the infrastructure? If the money actually makes it back to the cities blessed with overwhelming numbers of tourists they might be able to improve their transport etc without burdening their citizens.

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