As one of the world’s most visited cities, London attracts millions of tourists every year. In 2024 alone, the capital recorded 89 million overnight stays, according to the Greater London Authority (GLA). With the city facing significant pressure on its public services and infrastructure, the idea of a tourist levy has gained traction. The revenue generated would be directed towards improving local services and further bolstering the city’s appeal as a global destination.
The Model for London: Flat Fees or Percentage Levies?
A tourist tax, if implemented, could take various forms. Research commissioned by the GLA has highlighted three main models used in other global cities: a flat fee, a percentage-based levy, or a system based on accommodation ratings, like in France and Italy. According to the GLA’s findings, a flat fee or percentage model would be the most suitable for London, given that the city lacks the national hotel “star” rating system found in places like Italy.
In cities like New York and Toronto, visitors pay a levy based on a percentage of their accommodation cost. This model has proven effective in raising significant revenue, New York, for example, collects an estimated £493 million annually from its tourist tax. Alternatively, Tokyo employs a flat fee, which raises around £35 million a year, despite the city’s high number of overnight stays. The key advantage of these systems is their simplicity, providing a predictable and fair contribution from visitors.
London, which attracts millions of tourists each year, would likely see little to no decline in visitor numbers due to the tax, according to research by the Centre for Cities. The study suggests that popular destinations tend to experience less resistance to such levies. This insight is supported by the experience of other major cities, which continue to see steady tourism despite imposing similar taxes.
Local Councils Backing the Levy: A Financial Lifeline
Local councils across London have expressed strong support for the tourist tax. Westminster, home to iconic landmarks like Big Ben and Buckingham Palace, has long campaigned for such a levy, arguing that it would help balance the strain on local services. According to Westminster Council Leader Adam Hug, the council is often required to subsidise the needs of visitors, which outnumber the borough’s residents by more than five to one.
Similarly, councils in Southwark and Brent have voiced their backing for the levy, emphasising that the additional revenue would be crucial for supporting local services and boosting economic growth. This small measure would give “local councils an important revenue stream to support the local economy,” said Hug. In this regard, the tax would provide a much-needed financial buffer to support local infrastructure, particularly as the city continues to face growing demands due to the influx of tourists.
While there are still concerns from the hospitality industry, particularly regarding potential deterrents for both international and domestic visitors, research suggests that the benefits of such a tax would far outweigh the drawbacks. Kate Nicholls, chair of UK Hospitality, has expressed concerns that the levy may discourage tourists and negatively impact families planning short breaks. However, the general consensus is that the city’s tourism economy is resilient enough to absorb such a tax without substantial losses.
London’s potential tourist tax, which would place the city on a similar footing to other major international destinations, has sparked both enthusiasm and debate. With millions of overnight stays every year, the capital stands to benefit significantly from the added revenue. Local authorities are optimistic about the prospects, viewing it as a way to improve services while ensuring that tourists continue to flock to one of the world’s most iconic cities.
