Does a tourist tax help or hurt local tourism?

Recent months and years have seen more and more areas proposing to introduce a “tourism tax” on visitors.

In July, the Welsh government voted through a new law allowing councils to tax visitors who are staying overnight in Wales. The amount of levy will vary by accommodation type, with those staying in hotels having to pay up to £1.30 a night, and those camping or staying in hostels facing an additional charge of up to 75p per night.

Liverpool has also become the latest city to introduce a charge, after the majority of Accommodation BID hotelier members voted in favour of introducing a £2 overnight stay levy on visitors.

These areas follow Manchester and Edinburgh in what is an increasing trend.

Debate has also intensified in other areas that could potentially be next, including in the Lake District.

What would a tourist tax mean for the Lake District? 

The hospitality and tourism sectors are a key component of the Lake District, with many fantastic businesses working hard to provide guests with the best experiences to complement the surrounding scenery. 

The Lake District National Park welcomes many million visitors a year, but the sheer volume of footfall in the area takes its toll on the landscape, with footpaths, fells and lakeshores falling victim to erosion and litter. 

The infrastructure of the small towns and villages throughout the Lakes can also be pushed to its limits due to the number of people visiting, with insufficient parking and narrow pavements, among other issues. 

At the end of 2024, Friends of The Lake District published a report titled ‘Who pays for the Lake District?’, which highlighted the "invisible burden" of tourism on the area's environment and infrastructure.

It is thought that if the funds generated by a tourism tax were appropriately reinvested back into improvements benefitting the area and the sector, it could be an extremely useful tool to address some of these issues; however, it is proving to be an incredibly divisive subject. 

Opposition to tourism taxes 

There are concerns that the introduction of such taxes is an additional cost burden on tourists that may drive them away to alternative destinations both in the UK and abroad.

The UK Hospitality Sector has the highest VAT rate in Europe on accommodation and meals, meaning that the sector is already at a financial disadvantage when compared to its European peers.

There are also question marks over how the tax would be collected, administered and distributed. Those in the sector would need to be absolutely sure that all funds collected were reinvested directly back into projects benefitting the area.

Whether the Lake District and indeed other tourism hot spots will introduce a tourist tax remains to be seen, and only time will tell if such a scheme would bring about benefits or more challenges for businesses.