London to introduce tourist tax, ending its status as last ‘no-tax’ G7 city

London, UK, is expected to introduce a tourist tax soon, ending its position as the only G7 major city without one, a move that has sparked strong opposition from the tourism sector.

According to the BBC on November 23 (local time), Chancellor of the Exchequer Rachel Reeves plans to grant local authorities the power to impose tourist taxes through legislation aimed at decentralization and strengthening community authority. If the bill passes in Parliament, London will also be able to implement a tourist tax.

Mayor Sadiq Khan, who has long advocated for a tourist tax, refrained from giving specific details about the plan but expressed optimism about its potential positive effects on the city’s economy. The London City Council emphasized, “A reasonable level of tourist tax would help maintain London as a leading global destination for tourism and business.”

Currently, other G7 cities such as Paris, Munich, Milan, Toronto, New York, and Tokyo impose various forms of tourist taxes. Within the UK, Scotland and Wales have recently implemented similar systems.

Although the method of collection has not yet been finalized, estimates suggest that charging £1 per visitor per day based on 2017 figures could generate around £91 million (approximately ₩175.3 billion) annually, while a 5% levy on accommodation fees could yield about £240 million (approximately ₩462.1 billion) per year. Studies cited by the city suggest that, given London’s popularity, the introduction of a tourist tax is unlikely to significantly affect demand.

However, the tourism industry has voiced strong opposition. Kate Nicholls, CEO of UK Hospitality, representing London’s hotel sector, criticized the move, saying, “The UK already has a high 20% VAT, and a tourist tax would be just a tax on top of tax.” She warned, “If already heavily taxed customers are discouraged, jobs, growth, and investment could all be threatened.”