There’s always an air of caution and an urge to tread lightly when a Budget is approaching, in the hope that the relevant authorities don’t remember you and start having tax thoughts.
That is particularly true heading towards the Spring Statement next month. The government’s theme remains ‘we don’t have enough money to let you have nice things’, which means that Chancellor Rachel Reeves is going be hunting down the back of our collective sofa looking for spare change.
It’s easy to think that she’d already shaken us down, given the cost increases visited on us in the Autumn Budget. At EY’s annual hospitality event, held earlier this month, Peter Arnold, EY’s chief economist, said: “One of the strategic errors this government made was the NI increase, which was counter to the message of growth. They had ruled out taxes on working people so had ruled out a number of levers to try and raise serious revenue.
“The lack of political and business experience in government didn’t recognise that an increase in NI on employers created a perfect storm, particularly for those hiring on minimum wage. Funding from NI is anti-growth.”
Anti growth it may be, but the government had to find a tax which wasn’t counter to its election promises not to raise personal taxes and whether this does or does not achieve it is a debate for another time. What the sector is now facing is more direct, with Reeves having noticed that hospitality in general and hotels in particular are doing quite well for themselves.
Rumours now suggest that she will levy a tourist tax, such as we are about to see in Edinburgh and Wales, which, the TaxPayers' Alliance says, could raise £1bn per year. And who wouldn’t want that, one would reasonably think.
Well, the tourism sector for one. If something costs people more, they are less thrilled about paying for it. At the luxury end of the hotel market, money has seemed to be no object for some time now, but we’re not all at that end.
Given that, if it’s not now, it will be soon, what could the sector ask for in return for its generous donation? In Wales, UKHospitality has asked for the money to be ring-fenced to support the sector, but if this £1bn is a gap plugger, that might be wishful thinking.
In this hack's opinion, it would be nice to have, say, a dedicated minister. Someone to speak up for one of the largest employers and cash generators in the land. And don’t worry about them not being clued up on what a tenanted pub is, or what revpar means, we’re happy to help out with a bit of education. We’re hospitable like that.
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