The proposal in England would allow a levy of up to 5% of the cost of accommodation, with the revenue intended to be reinvested locally. On the face of it, that may sound like a modest charge, but for Northern Ireland’s hospitality industry, already operating with a 20% rate of VAT, the implications of adding another tax to the cost of staying here are much more significant.

A 5% levy, with VAT also applying to the charge, effectively pushes the tax burden on accommodation to around 27.5%. That is an extraordinary level of taxation for an industry competing for visitors in an increasingly competitive international market.

UKHospitality research performed by Oxford Economics provides a useful warning about what can happen when the additional cost of a levy is considered across the wider economy. Its modelling of a 5% levy in England found it could result in £2.24 billion being lost from GDP, £1.78 billion less tourism spending, almost 11.9 million fewer nights spent in accommodation and 33,000 fewer jobs.

Those figures relate to England, so they should not simply be transplanted onto the Northern Ireland economy, but they demonstrate an important principle: a tax on tourism does not exist in isolation. Visitors respond to the overall cost of a trip, and businesses respond to the additional costs and administrative burden placed upon them.

That matters particularly in Northern Ireland, where we are already competing with the Republic of Ireland, which has a significantly lower VAT rate for tourism, as well as destinations across Europe with lower rates of consumption tax.

The argument that other European cities operate visitor levies also needs some context. A levy cannot be viewed separately from the wider tax environment in which businesses operate. What might be absorbed in one destination can become a much more significant competitive disadvantage in another. The hospitality and tourism businesses in these European cities are able to absorb their levies because they operate with significantly lower VAT rates.

There is also a fundamental question about what happens to the money raised. There would need to be absolute clarity that the revenue is additional investment in tourism, hospitality, infrastructure and the visitor experience, rather than simply replacing existing public spending.

The tourism and hospitality industries are busy working to attract more visitors, encourage them to stay longer, and support the businesses that employ thousands of people. Adding another layer of taxation risks making that job considerably harder.