UKHospitality has called for a ‘holiday bonus’ scheme to replace proposed local tourism levies, warning that a nationwide holiday tax could cost the sector 33,000 jobs.

Rather than introducing a nationwide holiday tax, UKHospitality has called on the prime minister to consider its proposed ‘holiday bonus’ scheme, suggesting that, instead of applying an additional levy, the government should distribute central revenues to local authorities based on visitor numbers. This is similar to its approach to income tax and business rates.

The association said the proposed model would encourage tourism, support hospitality businesses and stimulate economic growth, while avoiding the potential impacts it associates with a holiday tax, including the loss of 33,000 jobs and a £2.2bn reduction in national GDP.

Allen Simpson, chief executive of UKHospitality, said: “As we warned would be the case, proposed holiday tax powers for Mayors are being swiftly expanded to every strategic authority in England. It’s clear the Government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost-of-living crisis.

“I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs. The solution is simple. Instead of devolving taxation powers, devolve central government revenues to local authorities through a holiday bonus instead.”

He added: “Rewarding local authorities with fixed revenue per visitor night, for example, incentivises tourism and drives economic growth, rather than costing jobs, deterring visitors and making family holidays more expensive.

“The cost of lost VAT and increased benefits through reduced economic activity and employment will in many areas outweigh the revenues raised by a tax. A holiday bonus is the right kind of devolution – more revenue and control for local communities, without the lost jobs caused by a holiday tax.”