A tourist tax in London could generate more than £350m in revenue for the capital, a new report has found.
The UK government announced last November that mayors in England will get new powers to impose a visitor levy on overnight stays.
A new analysis by Central London Forward (CLF), a partnership of 12 London boroughs that aims to drive sustainable growth, has predicted that an overnight levy could raise over £350m across London each year.
The report based its analysis on a hypothetical three per cent charge on top of a room cost.
When the devolved tourist tax powers were announced last year, the Mayor of London, Sadiq Khan, said it was “great news”.
“The extra funding will directly support London’s economy and help cement our reputation as a global tourism and business destination,” he said.
The government is still consulting on the design of the levy, so the mayor is waiting for a response before London proceeds with how it will roll out the new tax.
It has not been decided yet how money raised from the tourist tax will be split between local authorities and City Hall.
However, some local authorities are already campaigning to keep a proportion of the revenue within their boroughs to help reduce tourism pressures, especially in parts of central London that see the largest concentration of visitors.
CLF represents a large proportion of the central London boroughs, including the City of London, Westminster, Southwark, Tower Hamlets and more.
The organisation says that central boroughs will play a large role in generating revenue from the tourist tax, predicting that £275m will be raised there alone.
It claimed, however, that these boroughs do not have any dedicated funding to manage the pressures of London’s visitor economy.
It adds that 71 per cent of London’s hotel rooms and 67 per cent of short-term lets can be found among its 12 boroughs, and therefore will absorb the bulk of the municipal costs.
CLF said local authorities are calling for at least 50 per cent of the revenue raised by the levy to be kept by the boroughs to help with the impact of tourism.
The organisation explained that while tourism brings economic benefits, overtourism can strain local council budgets by increasing costs for public services and infrastructure maintenance, all the while not receiving compensation.
Cllr Adam Hug, leader of Westminster City Council and chair of CLF, said the boroughs in central London play a “crucial role” in the growth of the visitor economy.
“We work to keep the streets clean, well-maintained and safe, we invest in new public realm projects from the transformation of Regent Street to upgraded public loos in my own borough, and we work with businesses to give them the support they need to grow.
“Many of these services for visitors are currently funded by our local residents, which is not right,” he said. “The government should legislate to ensure that at least 50 per cent of the revenue raised by an overnight stay levy is kept by London boroughs, so we can continue providing the services London needs.”
Read more: UK tourist taxes – where are they charged and how much do they cost?
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