Wednesday, 18 January 2017

Bristol should have a 'hotel tax' to fund low carbon transition

I think it's time that Bristol seriously considered having a 'city tax'. This would be a small amount of money levied on tourists staying in hotels in the city, raising funds for important projects. In my view there is a strong case that this money should be used to aid the transition to a low-carbon economy, and specifically targeted at lower-income households.

The point is that Bristol needs money. Like other authorities around the country Bristol City Council is in trouble, with a £92 million hole in its next five year budget. At the same time the city itself is booming, with population, construction and tourism expanding rapidly. We also know that the transition to a low carbon, environmentally friendly economy is both the greatest challenge and greatest opportunity of the coming decades. It is also essential. We simply cannot carry on as normal.

A tourist tax would help with both, and would also be a fair tax. Tourism is a high-carbon and relatively high-income business, and a little tax on it is justified.

Bristol receives around 526,000 international tourists a year. If each spends on average six nights in the city, then there is the potential to raise millions of pounds. There are also around 1.5 million domestic tourists, each spending around 2 nights in the city (they should also pay the hotel tax). Of course the tourism industry also brings over a billion pounds to the local economy, so there would be no advantage in making the tax punitive, but a small amount would be justified.

Lots of cities have these taxes - from Amsterdam to Cologne, Paris to Singapore - and Bristol's close neighbour Bath is also considering it. No doubt parts of the hotel industry will cry foul, but there is no reason to worry. A tax of £2 per night per person on a hotel room might earn the city £12 million a year. That would be less than 0.1% of the total tourism spend on the local economy, so would be unlikely to harm the industry, and would give money directly to the Council.

£12 million is not vast, but it is not nothing either. And it would be a start. It is one of the few taxes a city can have which is not a tax on the electorate, making it politically viable. Finally if the tax was publicly and visibly advertised as helping the environment many tourists would welcome it, and it would boost Bristol's 'green credentials' which are an important part of its overall 'brand' (itself something which draws tourism).

So what would we do with this small windfall? It could be targeted at specific functions - such as deploying solar power on low-income housing. The returns (small though they currently are, around 3%-4%) could accrue to the Council, while residents would get lower electricity bills.

Other good options would include home insulation to make a contribution to fuel poverty, biodiversity projects in the city (here a few million could make a very big difference), affordable zero-carbon housing, or public transport.

At the very least it is worth a try. It would be a bold move, and a fair one. Give it five or ten years, and then see who wants to get rid of it.

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