Fiscal devolution is important if the Prime Minister is going to put power back into the hands of communities. The plans to allow mayors to introduce a tourist tax is a step in that direction. How the mayors wield these powers will be key to how welcoming people are.

On the surface, the idea of a tourism tax, a small levy applied to visitors that can then be invested in the region, is to be welcomed. It not only raises much needed revenue but also gives mayors autonomy on spending. It’s the very definition of putting power in the hands of communities.

However, the unintended consequences of tax raising powers need to be considered carefully.

The hospitality industry has, with good reason, sounded the alarm over the added burden that this could place on the visitor economy. If tourists start turning their backs on the region then that could have disastrous consequences.

Mayors after attending a meeting chaired by Communities Secretary Angela Rayner. PIC: Gary Oakley/PA Wire

placeholder image — Mayors after attending a meeting chaired by Communities Secretary Angela Rayner. PIC: Gary Oakley/PA Wire

The warning signs are there with a tourism tax introduced in Edinburgh in July already impacting the hospitality industry negatively. At a time when young people are struggling to find employment, the last thing Britain needs is for businesses to pare back recruitment even further.

There is also the question of where money raised would be spent. It could lead to city leaders demanding that more money be spent where the tourists are visiting rather than across the region.

The Government’s earnest engagement with mayors is to be applauded. As is the marked shift away from the begging bowl culture of previous governments that saw mayors having to bid for pots of cash from Whitehall. But the concerns of businesses that could be affected by additional taxation cannot be overlooked. It is incumbent on both regional mayors and central Government to ensure that devolution doesn’t damage the economy.