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Take a flight to Rome, Lisbon or Amsterdam, check into your hotel and you’ll see it: a charge at the bottom of your bill. It might be called a city tax, an overnight levy or a tourist charge, but it means the same thing – a few extra euros you’ll have to pay up.

For a long time, the UK has been an outlier in Europe by not having tourist taxes, but that is starting to change.

In July, Edinburgh will introduce a five per cent charge on overnight stays, followed by other Scottish cities setting their own rates in 2027. That same year, councils across Wales will be free to impose levies of £1.30 per person per night, reduced to 75p for hostels and campsites.

Throughout its first year in office, the Labour government in Westminster was clear: England would not be joining them. As late as September 2025, the then-tourism minister Chris Bryant told Parliament there were “no plans” to enable the charge.

“Many people in the sector have made the point to me that they feel taxed enough,” he told the Commons. “I do not know that we would want to add any more to that.”

But just two months later, the government had changed its mind – provoking anger from the hospitality sector but joy from Labour mayors across England, who see it as a vote of confidence in the devolution agenda.

Under the Overnight Visitor Levy Bill, name-checked in last month’s King’s Speech, mayors will decide whether to have a tourist tax in their area and will collect revenues raised from it.

Yet questions remain over how the charge will be structured, how much discretion mayors will be given to vary it, and whether any spending from the proceeds will be ringfenced by national government. And as well as facing opposition from the Tories and Reform UK, including the parties’ mayors, the bill will also meet resistance from several Labour MPs in deprived coastal areas, who fear a backlash from hard-up voters watching the price of their staycation climb higher.

Why did the government change its mind? According to reports last year, Chancellor Rachel Reeves had been concerned about the tax reducing visitor numbers and hindering economic growth – but a sustained campaign by Labour’s mayors shifted the dial.

Steve Rotheram, the Liverpool city region mayor who played a key role in the talks with government, specifically Reeves and James Murray, then chief secretary to the Treasury, tells The House that the Chancellor was worried revenues raised from the tax would simply be used to plug gaps in cash-strapped local government.

“Just to say ‘we want an overnight visitor levy’ didn’t cut it,” he says. “Rachel’s a detail person, so she wanted to be convinced that it wasn’t going to go into potholes, or the pressures that people have got with childcare in their areas, or whatever it might be.

“When we went round the table, James – who was asking the questions – what he was after really were concrete examples of where it could be used to stimulate economic growth, and we were able to do that.”

Bassam Mahfouz, a Labour member of the London Assembly, says the levy could play a significant role in funding large infrastructure projects across the capital. Last year, he and colleagues on City Hall’s oversight committee visited Paris, where a tourist tax is being used to help fund a new metro network: the Grand Paris Express.

“Without fiscal devolution, political devolution is pretty much meaningless,” he says. “One of the key learnings that we took when we were talking to other cities across the world was that they all had additional financial levers, additional powers to raise revenues… You can’t be relying every time on going cap in hand to government.”

The government’s consultation on the levy says the money will “support local leaders to drive economic growth in their areas, and make their places more desirable to visit, live and do business in” – but the catch-all nature of that description has not impressed the hospitality industry, who fear their sector is being asked to pick up the tab for other parts of the economy. Instead, they say, revenues raised should be reinvested directly into boosting visitor numbers.

“It has to be ringfenced back into tourism,” says Labour MP Chris Webb, who chairs the APPG for Hospitality and Tourism. While some mayors may see it as “a possible way to get extra resources for local transport, police and other bits”, he cautions against this.

“We know from the previous government, once you start offering this tax, it then means there will be an expectation in any grant settlements the government gives that they will expect you to use that tax and to the maximum.”

The government has insisted it “will not compel any mayor to introduce this levy, nor will central government reduce funding for mayors if they decide to do so”.

Asked about how the revenue will be used, tourism minister Stephanie Peacock tells The House there is “a strong argument for ringfencing money for tourism, but the whole point of giving it to mayors is for them to make that decision”. Notable, it is the Ministry of Housing, Communities and Local Government (MHCLG) leading on the policy rather than Peacock’s Department of Culture, Media and Sport.

“Without fiscal devolution, political devolution is pretty much meaningless”

There is similar uncertainty over exactly what kind of tourist tax English mayors will get: a percentage charge like Scotland or a flat fee like Wales?

The government favours the percentage model, saying it would be “fairest and more flexible”, but several mayors are arguing for the flat fee.

North East mayor Kim McGuinness, for example, is drawing up plans for a £2 per night charge, which could raise close to £20m per year for her region. South Yorkshire mayor Oliver Coppard is also making the case for a flat fee, following feedback from local hoteliers.

In Liverpool, Rotheram agrees a flat fee would be simpler and quicker to put into law, though he adds that mayors should be able to make changes to the model in the longer term.

The House approached every other mayor who has expressed support for the charge to ask what model they favour, but all either declined to comment or claimed they were not in a position to say.

Among them was London mayor Sir Sadiq Khan, though his Labour allies on the London Assembly are advocating for the percentage model as the more progressive option.

And Andy Burnham, who could soon have more power than any of them to decide what the tax looks like? True to form, his office told the government that “mayors and local leaders should have the power to determine the charging model” for themselves, “based on local data and local consultation”.

Webb, by contrast, says the rate should be identical across every area imposing it: “That’s what I’m hearing from the sector – they want to see uniformity on this.”

Nor will the charge be necessarily limited to mayors, as the government is also considering giving the power to Foundation Strategic Authorities (FSAs) – a new tier of regional governance with only limited devolution.

Cornwall, with more than four million visitors a year, looks likely to become one of those areas, and the county’s council is open to setting a tourist tax there.

“We fundamentally believe that all areas should have the power to decide whether to introduce an overnight visitor levy, regardless of whether they are a mayoral authority or FSA,” a spokesperson for the Liberal Democrat-run council said.

“We await further information from the government as to how such a levy would be implemented and will then consider whether it is the right thing to do for Cornwall.”

If tourist taxes are the norm in Europe, why should England’s hospitality industry be so vehemently opposed to them? Industry trade body UKHospitality points out that England already has a higher tax base than many continental destinations with tourist taxes.

VAT on accommodation in England is 20 per cent, compared with 10 per cent in Paris, Rome and Barcelona. The consumer, they argue, does not care whether their money is going to local or national government – their main concern will just be how much they’re paying overall.

“It is simply not true to say that this is a standard thing elsewhere in the world,” says Allen Simpson, UKHospitality’s CEO. “It’s not a question of who levies the tax, it’s a question of the tax level, and we are making one of our biggest export sectors uncompetitive.”

Increases in National Insurance contributions, business rates and the minimum wage have all caused the sector to shed jobs, he adds.

“The last two budgets have been an exercise in vandalisation against the hospitality sector. The sector was growing six per cent year on year and then the last two budgets have stripped out about 100,000 jobs.”

Modelling by Oxford Economics, commissioned by UKHospitality, suggests that the overnight levy would cause further jobs to be lost – potentially as many as 33,000 by 2030 if a five per cent charge were applied across England.

“There are certain areas where this will absolutely kill the local economy”

While Peacock admits “the sector will understandably have concerns” about the tax, Simpson claims that there also remains little enthusiasm for the policy across government.

“We’ve met the tax minister, the tourism minister, we’ve spoken to secretaries of state about it, we’ve spoken to No 10 about it, we’ve spoken to No 11 about it, we’ve spoken to the spads. I have yet to find anybody who actually thinks it’s a good idea,” he says.

“In politics, unfortunately, sometimes you find yourself doing things which you don’t think are a good idea because it’s politically expedient, and right now it is politically expedient to throw a bung to the mayors to keep them quiet.”

The organisation has also commissioned an MRP poll which reveals that a majority of voters in every mayoral authority are opposed to the tax. A majority also oppose it in 574 of Great Britain’s 632 seats.

While Labour’s urban MPs are likely to support the bill, some in deprived coastal constituencies are preparing to fight it.

“Small seaside towns like mine that rely largely on inward tourism from other parts of the UK – they’re not going to survive if this is implemented,” says South Shields MP Emma Lewell. “It’s just going to be one burden too many for them. They’re already struggling to stay afloat. This is going to see them off for good. I can’t sit back and allow that to happen…

“In areas like mine, this will be anti-growth – quite the opposite of what the government’s trying to do. I get that it might work in big cities, but there are certain areas where this will absolutely kill the local economy.”

She was as confused as anyone, she adds, when ministers reversed course on it last year: “There’s no massive clamour of MPs asking for it, the public don’t want it, it wasn’t in our manifesto, the industry certainly don’t want it… so I have no idea why the government is ploughing ahead with this.”

A spokesperson for MHCLG tells The House: “The visitor levy will give mayors more power to raise money and invest it in their priorities, like improving holiday destinations and growing the local economy to put more money in people’s pockets.

“The final design of the visitor levy has not been decided and it will ultimately be up to mayors to decide whether to use it, in consultation with businesses and others in their areas.”