Sleep Tax

Latest figures show the budget deficit in Q2 was up more than £3 billion on the corresponding period of last year. Add in where we are in the electoral cycle and it’s unsurprising that new measures to help plug the shortfall are being floated. In the Lyons Inquiry Into Local Government bed tax has been mooted as one revenue-raising idea.

Specifically, the proposal is that all hotels, hostels and B&Bs will be required to levy a 10% bed tax on their customers’ accommodation bill in addition to the 17.5% VAT that most of these places already have to charge.

It’s not hard to see why this must be a particularly appealing option to Labour strategists. The tax will mainly hit foreigners and the rich. Come the next election, entrepeneurs affected by the drop in business/bankruptcy are likely to be voting in constituencies with solid Tory majorities so no loss there.

I am resolutely against this tax. Firstly, it requires an extra layer of bureaucracy both for the hotel owners and for the government to enforce making it an expensive tax. With planning it is a relatively easy tax to avoid as hotel owners can reduce official accommodation rates by lifting prices on other products (e.g. food). Even more pertinent is the fact that in most places where it has been introduced it has been withdrawn quickly because of the disastrous effect on tourism and related services. The Balearics and New York are examples of aborted bed taxes. A bed tax may provide the Treasury with a short-term boost, but this is another example of bad policy.

Find out more and have your say


7th August Update

Great to see the leadership taking the anti-bed tax campaign to the streets. People remember these eye-catching events. We need more of these guerilla-type campaigns. Labour keep bending towards our policies, but we need to make sure that the electorate believe us when we tell them that's what we've been campaigning for all along. This style of campaigning helps.