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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