The trade body describes the announcement as a ‘shocking U-turn’, and says that the Government had previously said that it would not introduce such a tax, which could add £100 to the cost of a family two-week holiday in the UK, according to its calculations.
Research from Oxford Economics shows it represents a £1.6bnn tax increase for holidaymakers and could cost 33,000 jobs, reduce GDP by £2.2bnn, lose the Treasury £688m and reduce tourism spending by £1.8bn.
“The government has confirmed it will legislate to make family holidays more expensive during a cost-of-living crisis,” says Allen Simpson, chief executive of UKHospitality.
“It’s a shocking U-turn after it told both the House of Commons and UKHospitality that it would not implement a holiday tax.
“The facts are simple. A holiday tax will increase the cost of a staycation for Brits, it will hit lower income families hardest, it will lose the Treasury money, and it will cost 33,000 jobs.”
The trade body has also warned that the holiday tax is deeply unpopular with the public, with polling carried out for UKHospitality showing more than half oppose the tax (56%) and less than a quarter support it (24%).
Voters are also nearly 10 times more likely to reject an MP who backs the holiday tax, than they are to support them.
UKHospitality has written to each MP to tell them how many votes they risk at the next election.
“A holiday tax is wildly unpopular, as well as economically destructive,” adds Simpson.
“Twice as many people oppose it, than support it, and voters are 10 times more likely to punish an MP who supports a holiday tax, than they are back them.
“This tax, on top of the UK’s 20% rate of VAT, will make us an outlier in Europe. The tax on a holiday in the UK will become double many of our major rivals, who enjoy a much lower rate of VAT.
“It is nonsensical for the Government to go ahead with such an unpopular measure. There is still time for the government to think again and stop the holiday tax.”