Plans to introduce a holiday tax in the United Kingdom could cost British consumers up to £1.6 billion, according to research prepared by Oxford Economics for UKHospitality.
The analysis focuses on a proposed 5% tourism levy that could be introduced by 2030. Industry representatives warn that the measure could have serious consequences for both the economy and the competitiveness of the UK tourism sector.
According to Oxford Economics, the new tax could lead to:
- a £2.2 billion drop in GDP,
- a £688 million reduction in tax revenues,
- a £101 million decline in hospitality investment,
- and a reduction of around £1.8 billion in tourism spending.
The hotel, restaurant, and leisure travel sectors are expected to be hit hardest, especially as businesses are already facing high energy costs, inflation, and rising labor expenses.
UKHospitality is urging the government to abandon the proposal, arguing that additional charges could weaken the UK’s position in an increasingly competitive international travel market.
Experts also note that travelers are becoming more price-sensitive, and higher accommodation costs may encourage tourists to choose alternative European destinations instead.
The debate reflects a broader European trend, as many cities and countries search for new ways to fund tourism infrastructure and tackle overtourism. However, industry leaders warn that excessive taxes may ultimately reduce demand and harm the sector rather than support it.
