Local tax that hurts a nation

25 May 2006
Local tax that hurts a nation

A bed tax? Nice one, Tony. Great idea! Get more money into the local government coffers - that's the ticket.

Er, hang on, though, Tony - doesn't that rather go against our policy of trying to keep the money in the national coffers?

Um, and actually, wouldn't it mean a lot less money for the national coffers?

Yes, I do believe it would, Tony. You see, the hotels tell us that they are already struggling in a fiercely competitive market, and I think what would happen is this: they would try to absorb this tax rather than pass it on to their customers in order to remain competitive. So their profits would fall. And then they would pay less tax to us, Tony. And it might mean job losses, too, so that would mean a further reduction in tax revenue and national insurance revenue. Also, just imagine all that extra unemployment benefit we'd be lumbered with paying.

And then, of course, there's the knock-on effect. I mean, we don't actually care that it would mean less business for shops, restaurants, transport, entertainment, museums and the like… except that it would mean even less tax coming our way, and even more unemployment benefit to pay.

It's all beginning to sound quite expensive, isn't it, Tony?

Max Tozer
Hotelier-in-waiting, Loughton, Essex

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