areas, the only accommodation available is in the B & B sector as many such areas would not commercially support hotels. The B & Bs in these areas will tend to be the most economically fragile, therefore the most likely to close as a result of any negative impact to the B & B sector. Thus any such impact will disproportionately affect such rural areas.
The Government has often emphasised the strategic importance it attaches to entrepreneurship, small businesses, the service economy, and tourism‘ exports’; the B & B sector is a significant within all these categories, and is therefore a sector upon which the Government must be very sensitive as to the impact of any new tax.
Any tourist tax would in practice be regressive as it would bear especially heavily on lower-priced accommodation( for example, on the B & B sector as compared with the hotels sector), and in turn on lower earning consumers compared with higher earners.
Because the hotels sector is almost entirely operated using specialised IT-based booking systems, whereas the B & B sector is almost entirely operated by manual booking systems, a tourist tax would cause a huge new burden on the B & B sector, many times more onerous than its impact on the hotels sector. For the first time, B & B owners would have to create reporting systems specifically to cope with such a tax. Many have indicated to us that this alone would be sufficient to cause them to consider closure.
As B & Bs have no statutory registration system, any new tourist tax would effectively create a new national registration and regulatory system for B & Bs, requiring a new national database of B & Bs and all the requisite monitoring and administration this requires, which would in itself be a disproportionate cost to Government compared with the amounts of tax raised from B & Bs( especially if the reduction in other taxes, including income tax, resulting from a new tourist tax is taken into account).
The B & B sector has been disproportionately impacted recently by( amongst other things):
• increases in council taxes of up to 10 % per annum,
• very steep increases in the fees for licences for smaller enterprises under the Licensing Act 2003,
• the new requirement for premises with under six letting rooms to carry out Fire Risk Assessments( due in October 2006 under the RRFSO introduced by the ODPM),
• a new food safety regime introduced in the UK under EU directive on 1 January 2006,
• steep increases in energy costs,
• costs incurred in compliance with the Disability Discrimination Act;
we could continue this list, which includes many new taxes and regulations introduced by this Government, but our point is that our sector has suffered very considerable cost increases and administrative burdens, often disproportionately compared with the economy generally. These are already tipping the fragile economic balance of many B & B businesses towards closure; if in addition, a new tourist tax were imposed which would vastly increase the administrative and reporting burden for B & Bs whilst simultaneously forcing a significant effective price increase to the consumer and thus reducing sales, the result would be that thousands of B & Bs would decide to close.
We would also make some wider points about a tourist tax: the UK already applies 17.5 % VAT to accommodation and other tourist services, compared with say 5.5 % in
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