Across the UK, local authorities and mayors are exploring whether visitors should contribute directly to the places they enjoy. In Scotland, this power already exists; Wales is expected to follow in 2027.  The idea of a tourism tax has been promoted by mayors in the North including in their lobbying ahead of the budget.

In the North East, the idea of a modest regional tourism or visitor levy – perhaps £2 per night for overnight stays – has recently been floated by Mayor Kim McGuinness.

“A local tourism tax is so mainstream across the rest of the world you barely notice it, so it should not be a big step here in the UK. This is a good example of how mayors can respond to local need and deliver real change if they are given more financial freedom to do so.” – Kim McGuinness

On paper, it’s simple: visitors pay a small amount, and the money is reinvested into tourism promotion, infrastructure, and local amenities. But in a region like ours, where the visitor economy is diverse and dispersed, the reality is far more complex.

The questions are pressing: who pays, who gains, who loses, and who decides?

The North East visitor economy

Tourism is a significant economic driver in the North East. Latest estimates suggest the sector contributes £5-6 billion annually and supports more than 60,000 jobs, with around 7.8 million overnight stays recorded in 2023/24 alongside tens of millions of day visits.

Visitors sustain hotels, restaurants, cultural venues, and heritage sites from Berwick to Bishop Auckland, from coastal resorts to city centres. They also generate pressures – on transport, public services, and public spaces – that fall largely on residents and councils.

It is understandable that the Mayor would want to explore additional funding tools, but the case must be made with data, transparency, and buy-in across the region.

Who actually pays?

A visitor levy would likely apply to overnight accommodation – hotels, B&Bs, short-term lets, and holiday parks. Visitors might perceive it as a small addition to their bill, but the economic burden could partly fall on accommodation providers who cannot fully pass on the cost.

For smaller operators, the administrative burden could outweigh the revenue collected. A well-designed levy can mitigate this: exemptions for small businesses, caps for longer stays, and streamlined digital collection. Poorly designed, it risks punishing the very businesses that sustain the North East’s visitor economy.

Who gains?

If revenues are ring-fenced and transparently managed, the potential benefits are clear. Hypothecated funds could support cleaner streets, improved signage, better transport links, marketing campaigns, festivals, and heritage site maintenance.

Without ring-fencing, public trust quickly erodes. Visitors, businesses, and residents need confidence that the money will be spent on tourism-related improvements, not absorbed into general budgets.

Who might lose?

Even a small levy could deter some visitors or shorten stays, particularly domestic families or lower-income tourists. Small coastal or rural guesthouses may be disproportionately affected if collection and reporting are cumbersome.

Regional fairness is another issue.

If revenue is pooled, will smaller districts see a fair return, or will urban centres like Newcastle capture most of the benefit? Competitive positioning also matters: England’s regions compete for domestic and international visitors, and pricing decisions influence visitor choice.

Lessons from elsewhere

Cities around the world offer instructive examples:

These examples share a common trait: they are city-centric, with high concentrations of accommodation and tourism demand.

Cities versus regions: Why NEMCA is different

NEMCA covers seven local authority areas: Newcastle, Gateshead, North Tyneside, South Tyneside, Sunderland, Durham, and Northumberland. Visitors are dispersed across cities, towns, coast, and countryside. Revenue collection is therefore more complex, and benefits may be unevenly distributed.

Governance is another challenge. Unlike city councils that can act unilaterally, the Mayor cannot impose a levy alone. Cabinet agreement from all seven council leaders is required, and legislation from central government may be necessary.

Equity is also sensitive. Urban hotels may generate most of the revenue, while rural or coastal B&Bs face administrative burdens with limited direct benefit. Without careful design and collaboration, the scheme risks friction, political pushback, and reputational damage.

Mayor McGuinness has publicly advocated exploring a regional tourism tax as a tool to support economic growth and invest in the visitor economy.

Yet there is no public evidence that the seven council leaders who make up the NEMCA Cabinet collectively endorse the proposal. Some leaders have been cautious or skeptical, citing potential risks to small businesses and uneven benefit distribution across urban, coastal, and rural areas.

Without agreement among the councils, a levy risks being seen as overreach rather than a well-considered policy. Transparent governance, open consultation, and rigorous modelling are essential to ensure fairness and economic viability.

Levelling Up or Levying Up?

Evidence and equity

ONS data show that the North East relies heavily on domestic tourism, which is price-sensitive. Occupancy rates outside peak season hover around 60%, and many small operators remain vulnerable.

Equity is another key concern. Day visitors – the majority of trips in the North East – would not contribute, meaning a levy could disproportionately burden a subset of businesses and visitors. Transparent modelling, consultation, and possible exemptions are essential.

A sensible next step

Exploring a visitor levy is not a commitment to impose one. The next step should be an independent feasibility study that models revenue and administrative costs by council area, assesses impacts on different accommodation types and visitor segments, examines distribution of benefits across the region, and consults openly with hoteliers, B&Bs, and local residents.

The principle behind a tourism levy is appealing: visitors should help pay for the places they enjoy. But in a diverse, multi-council region like the North East, implementation is far from straightforward.

Governance, equity, competitiveness, and transparency all matter. Done properly, it could provide a sustainable revenue stream to strengthen the visitor economy. Done poorly, it could create division and deter the very visitors the North East wants to welcome.

In short: Tourism, Tax, and Trust are all on the line. The debate should focus on practical, fair, and inclusive growth for the entire region.