Manchester tourist tax could boost city's finances

A recent study by the Northern Powerhouse Partnership concluded that replicating Manchester’s £1 tourism levy across England would raise £428 million for local authorities annually. In the sylvan Lake District alone, the charge could raise £5.5 million per year

By Prasun Sonwalkar

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Published: Mon 17 Apr 2023, 11:20 PM

What first comes to your mind when Manchester is mentioned? To people from South Asia, Africa or other former colonies of the British Empire, it was one of the major centres of imperial power outside London, mainly economic. Its cotton and textile mills figured prominently in the economic headwinds of colonial India, when protests against the British were raging, and where Mahatma Gandhi made it a point to visit in 1931.

The city is reputed to be the world’s first industrialised city, besides being the base of scientific milestones, such as splitting the atom in 1917, as well as the home of the prominent suffragette, Emmeline Pankhurst, who led the movement to demand the right to vote for women (granted in 1928).

It has now added another first: Manchester has become the first British city to impose a tourist tax. From April 1, visitors staying in a Manchester city centre hotel or holiday apartment are required to pay a £1 per night City Visitor Charge. It is estimated to generate annual revenue of £3 million that would be dedicated to tourism-related and cultural projects, as well as more mundane necessities such as street cleaning.

Manchester is the first in Britain to levy the charge, but there are several European cities and destinations where it has been levied for some time now, including Venice, Rome and Barcelona. In Barcelona, for guests in rental accommodation, the charge per night is €4. Rome’s city tax varies from €3 to €7 a night according to the rating of the accommodation, while in Venice, where the charge also depends on the star rating of accommodation, there is a demand to introduce a day-tripper tax of up to €10 a person.

Visitor levies are common across the world and more tourist destinations are introducing them to help fund the public services and infrastructure that are integral to the visitor experience. More than 40 countries and holiday destinations have introduced a form of visitor levy, including Croatia, Amsterdam, Berlin, Paris, Frankfurt, Bruges, Quebec, Balearic Islands and New Zealand. Greece operates a country-wide levy. In Italy, it is applied at a city/town municipality level, while Catalonia operates a regional-wide levy.

The Manchester levy is also intended to help to fund the new Manchester Accommodation Business Improvement District (ABID), which aims to “improve the visitor experience” and “support future growth of the visitor economy” over the next five years. Nearly 6,000 hotel rooms are to be added to Manchester over the coming years, with predictions that it will lead to an extra million overnight stays.

Annie Brown, chair of ABID, says the tax is a smart move: “I think (the message it sends) has been a consideration, however, when you compare it with European cities that have had taxes and visitor levies in place for a number of years, we feel it’s a small amount comparatively. There are other cities in the UK looking to put in place what Manchester has done, I don’t think it’s a charge that’s offputting. It’s projected to make about £3 million annually and that will fund the ABID and we will get the attractions, and cleaning, and deliver against our business plan. It’s going to be the largest accommodation business improvement district outside central London in terms of the revenue it generates.”

In recent years, Oxford, Bath and Hull have contemplated such a levy, while Edinburgh – another tourism hotspot – is planning to introduce a £2 per night tourist tax, subject to legislative approval from the Scottish parliament. The Welsh government is also considering introducing a visitor levy, although an exact fee has not yet been set. Wales has a rich and diverse offering for tourists: From the sandy beaches of the Gower Peninsula to misty peaks in Snowdonia, to vibrant, experience-rich breaks in cities such as Cardiff. The Welsh government says local authorities will be able to choose to raise additional funds through implementing a levy.

Facing cuts, local authorities across Britain have been struggling with finances, a situation which makes the tourist tax a useful source of revenue. A recent study by the Northern Powerhouse Partnership concluded that replicating Manchester’s £1 tourism levy across England would raise £428 million for local authorities annually. In the sylvan Lake District alone, the charge could raise £5.5 million per year.

Tourism excess is a reality in many locations across the globe, posing new challenges to local authorities and infrastructure. For example, the large number of second-homes in hotspots such as Devon and Cornwall, which lie empty most of the year, has raised house prices, making them unaffordable for the local people. Elsewhere, the financially more lucrative practice of letting out rooms or homes for short holiday periods has also affected the availability of rental accommodation in hotspots, forcing the UK government to consider restrictions on such landlords.

As cabinet minister Michael Gove says, “Tourism brings many benefits to our economy, but in too many communities we have seen local people pushed out of cherished towns, cities and villages by huge numbers of short-term lets. I’m determined that we ensure that more people have access to local homes at affordable prices, and that we prioritise families desperate to rent or buy a home of their own close to where they work.”

The new Manchester levy is a small effort to deal with the challenges posed by the booming tourism sector, but it also represents a way by which local communities can exercise some influence and control. Tourism industry experts say there is little evidence to suggest that such charges have a negative economic impact where they are proportionate. A significant example is in Valencia, Spain, where the regional parliament is planning to allocate part of the income from its new tourism tax revenue for the construction of affordable housing for local residents. In fact, in several hotspots where levies have been introduced, visitor economies continue to flourish.

- The writer is a senior journalist based in London.

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