Hotels and supermarkets are set to be hit by extra taxes at the upcoming Budget as Chancellor Rachel Reeves hopes to raise more than £20bn in taxes.
Reeves is planning to allow mayors to hit holidaymakers with an overnight levy on hotel and rental home stays at the Budget, opening up new cash streams for city authorities to invest more on public services.
The Times reported that the move would raise hundreds of millions of pounds and will be introduced through amendments to a devolution bill passing through parliament.
Authorities in Wales and Scotland already have the powers to set a levy on overnight stays while several European cities including Venice, Barcelona and Paris also have a tourist tax.
It was previously reported that Reeves opposed the plans, backed by former deputy prime minister Angela Rayner, amid concerns about the impact on the tourism and hospitality sector.
Industry group UKHospitality has opposed the tax due to fears the UK may not remain competitive, with the hotelier Sir Rocco Forte previously calling the levy “pernicious”.
It is just one way the Chancellor may target the hospitality and retail sectors this week.
Sugar tax to hit shoppers
Reeves is also expected to expand the soft drinks levy to include other milk-based products including packaged coffee and milkshakes.
The government launched a consultation over the summer to consider the expansion of the levy, with a final policy decision to come at the Budget.
According to The Telegraph, the levy, currently worth 18p for every soft drink containing 5g or more of sugar per 100ml, will be extended to dairy products and could be expanded to drinks containing 4g of sugar per 100ml.
The plan would come as the government pushes Britons into choosing healthier options during their weekly shop as it hopes to save billions of pounds in NHS expenditure on obesity.
The added tax would also help fill a £20bn fiscal hole after it was reported that plans to raise income taxes at the Budget were ditched.
A series of smaller tax hikes could leave public finances under more intense pressure given sin taxes including a levy on sugary drinks can be volatile each year.
The Office for Budget Responsibility (OBR), which forecasts government revenue levels from tax intake in five-year periods, said earlier this year it had frequently overestimated tax intake levels from sin taxes.