Paul Swaddle, Westminster Council’s leader, said VAT rates for hotels in other European cities were “significantly lower and the total tax burden is lower”, so the tourist levy could make Westminster hotels less competitive.
In France, which has the same 20% standard VAT rate as the UK, hotel stays are taxed at a 10% reduced rate with many cities applying their own local tourist levy.
Several other European countries apply a similar reduced VAT rate to hotel stays.
“If the levy is to be raised, local authorities need to keep at least half to be spent locally for services that benefit visitors, such as keeping the streets clean and safe,” Swaddle said.
He said the cost of supporting the “visitor and commuter economy in Westminster” is estimated at £115m.
London Councils, which represents the capital’s 33 local authorities, has also called for “boroughs to retain a fair share of revenues”.
City Hall and the government have not laid out how the levy would be collected, distributed or spent.
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