The Lyons Inquiry into local authority funding has recommended a government consultation on allowing councils to implement a bed tax.
The move reflects a partial success for the hospitality industry, which has lobbied Sir Michael Lyons hard not to propose the levy on hotels and B&Bs.
But it leaves the door open for local authorities to roll out the tax if they so wish, a move that has been described as "the worst of all worlds" by operators.
Speaking at the launch this morning, Lyons said: "I have not been convinced by the arguments in favour of a tourist tax, but in some areas where the sheer weight of tourist places a burden on the local community, it could be justified."
The report says:
"Some local authorities have supported the proposal for some form of tax on tourist pressures. Over the past year, this proposal has generated significant debate within the tourism industry and beyond. Accommodation taxes have been deployed in a number of places around the world, with varying degrees of success. It is clearly important to weigh the contribution that tourists make to the local economy against the costs they impose and the likely impact on the tourist industry of any taxation proposal.
"I do not support the introduction of any new taxation powers carelessly, and proposals for these sorts of taxes are likely to be relevant only in some areas. In my view, a local accommodation tax is only likely to be acceptable if a local authority can demonstrate that there is a robust evidence base, local support for the tax, and has a proposal developed in partnership with local businesses and residents, who will continue to have a voice in the evolution and review of the scheme.
"With that in mind, I think that the Government should consult on the costs and benefits of providing a permissive power for local authorities to levy taxes on tourism, including a possible tax on accommodation, and on whether local authorities would use such a power. It should use the results of that consultation to examine the case for extension of such powers to local authorities."
By Daniel Thomas
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