UKHospitality has called on Labour mayors to support a 10% VAT rate for hospitality as a condition of introducing a proposed holiday tax in their areas.

The trade body has written to all Labour metro mayors after several said they would not introduce a visitor levy above 5%. UKHospitality is also calling for that limit to be made a statutory cap.

The organisation said mayors often point to visitor taxes in cities including Paris, Rome, Lisbon, New York and Berlin as evidence that such levies are common internationally. However, it argued that these countries also generally have lower VAT rates on hospitality.

Allen Simpson, chief executive of UKHospitality, said the UK’s 20% VAT rate puts its hospitality businesses at a disadvantage compared with competitors where VAT is 10% or lower.

In the letter, Simpson wrote: “You have all said that it is commonplace around the world to have these taxes.

“But as you know, it is also commonplace for the VAT on holidays to be far lower than in the UK. In France, Spain, Germany and Italy the VAT is 10% or lower but here we charge a full 20%. Indeed, the only countries who charge 20% VAT along with a holiday tax are countries trying to shrink their tourism sector.

“With this new proposal a family from Bootle visiting Manchester could face a tax burden of around 27% on their hotel stay, but a trip to Berlin would incur only 14.5%. I am therefore writing to you as devolution pioneers who care deeply about jobs in your community to ask that you make two commitments.”

He added: “First that you support a 10% VAT rate for hospitality to bring us in line with our major competitors and commit to not implementing a holiday tax until we have secured that change.

“Second that you support a cap in legislation on a holiday tax at no higher than 5% to prevent the inevitable creep in the level as years go by. This is a mainstream position to take. Cities across the world do it. And the Prime Minister agrees.”

In February, Andy Burnham said: “I would argue for a VAT rate more consistent with what you find in Europe because of the social value that your businesses bring to places and towns that need that life injected into them.”

UKHospitality cited Oxford Economics research estimating that 33,000 jobs could be lost as a result of the proposed tax. It also said the average family could face an additional £100–£150 in tax on their holiday.

The trade body said the potential levy comes on top of an estimated 100,000 hospitality jobs lost over the past two years due to public policy.

Simpson’s letter also called on mayors to support legislation setting a maximum 5% rate, rather than relying on a voluntary cap.

The proposed visitor levy would form part of the government’s wider devolution plans, with UKHospitality arguing that any new tax should be accompanied by measures to bring the UK’s hospitality VAT rate closer to those of other European markets.

Simpson said: “Devolution is the future. But hospitality cannot afford to pick up so much of the bill. This proposal commits the government to a joined-up package of devolution rather than simply tax rises. I hope you can join us in calling for genuine parity with Europe.”