Fears for Bay economy as ‘tourist tax’ powers unveiled

Fears are growing over the future of Torbay’s tourism sector after the Labour Government confirmed plans to give regional mayors the power to impose an overnight visitor levy - dubbed a “tourist tax” - across Devon and Cornwall.

The proposal, announced in the House of Commons on Tuesday (25 November), would allow a regional mayor to charge visitors an additional fee per night for hotel stays and other holiday accommodation. Ministers also signalled that the power could be extended to areas without an elected mayor but with a combined strategic authority, raising the prospect that Torbay could be included.

The news comes as the Government progresses legislation that could force Cornwall to join with Devon under a single elected regional mayor - a move that could reshape decision-making across the South West and have major consequences for Torbay’s visitor-led economy.

Former Torbay MP and Conservative minister Kevin Foster said the levy poses a “deeply worrying” threat to the Bay, already reliant on tourism jobs and businesses.

“The announcement a Regional Mayor will have the power to hit Devon and Cornwall’s iconic tourism industry with yet another tax is deeply worrying. A tourism tax would be yet another burden on a sector which is already being hit hard by Labour’s tax rises,” he said.

Foster argued that the levy would add to existing pressures including increased National Insurance contributions and higher business rates announced in the Budget, warning that the combined effect risks deterring visitors and raising costs at a time when many local businesses are already struggling.

“An overnight visitor levy would see those booking hotel rooms and other tourism accommodation within our region charged an additional fee per night as a tax. This would be in addition to the VAT already applied to holiday accommodation which they must pay and taxes paid by tourism businesses, such as business rates and national insurance contributions,” he said.

He added: “It might seem a handy way for those on the left to pledge yet more spending to their supporters, whilst handing someone else the bill. Yet this ignores how much the tourism sector creates jobs, supports families and makes our region what it is. If tobacco taxes deter smoking and alcohol taxes deter drinking, what do they think a tourism tax will do?”

Foster also criticised Labour MP Perran Moon over comments on whether an elected mayor could be imposed on Cornwall.

“When two amendments were proposed to prevent the Labour Government imposing an Elected Mayor on Cornwall, Perran Moon voted against. He now moans about the potential imposition of a Mayor for Devon & Cornwall, but it’s the law Perran Moon voted to back which is set to decide this rather than the people of Cornwall whose decision it should be,” he said.

“Judging by his comments today there’s a new word in the gerlyver kernewek for hypocrite: Perran.”

Budget concerns add to uncertainty

The tourism tax row comes just a day after Torbay’s Liberal Democrat MP Steve Darling criticised the Government’s Budget, warning it had failed to support key sectors in the Bay.

Darling branded it a “botched Budget” that “failed to deliver the real change people in Torbay were promised”, while hitting families and businesses with “a tax bombshell for millions”.

He also raised concerns over the lack of support for hospitality - a sector already worried about the impact of a potential tourist levy.

“The Chancellor refused to cut VAT for hospitality businesses,” Darling said. “An emergency VAT cut until April 2027 would have provided much needed relief to local high streets and protected jobs.”