The levy, which has been dubbed a 'bed tax', has been proposed by the York Fairness Commission which was set up by York City Council last year to suggest ways of tackling inequality in the city.
The commission, headed by Archbishop of York Dr John Sentamu, published its interim report in November 2011 with recommendations including to 'explore options for introducing a York Visitor Heritage Contribution (a 'tourist tax')'. The visitor contribution of up to £1 a night would raise cash to help free up parts of the Council budget taken up with maintaining the high impact of tourism in the Yorkshire city.
Although in its report the commission claimed the tax would be capped at a level that would not deter visitors, hoteliers have condemned the plans as potentially detrimental to the industry - a view that has now been shared by the northern region committee chair of the BHA and the proprietor of the Best Western Willerby Manor Hotel in Hull, Simon Kershaw.
"Such a tax is very discriminatory and potentially very damaging. A 'bed tax' in York would hugely disadvantage hoteliers because it would drive potential visitors to stay in nearby towns only for them to make a day trip to York. Who would gain by that? Certainly not hoteliers in York,” he said.
Kershaw added that just 40 per cent of tourists stayed in hotels with other visitors using a range of options none of which were on a statuary register and as easy to tax as hotel users. The UK hotel industry, Kershaw continued, was already at a disadvantage to its European neighbours due to high VAT.
In the report of 10 principles and 30 recommendations, the commission acknowledge the introduction of such a tax would be subject to 'legal limitations' and Kershaw argues local authorities would not be able to introduce such a tax without Government approval.
In 2007 the Lyon's Inquiry into local government led by Sir Michael Lyons suggested a 'bed tax' but the proposal was not taken up by the then Labour government.
As well as a very negative response from hoteliers including the York Hotelier's Association, the proposal has received a lukewarm response from the tourism promotion organisation for the city - Visit York.
Gillian Cruddas, chief executive of Visit York said: "Whilst fully supporting the principles of the Fairness Commission it is vitally important to protect and nurture York’s important tourism sector which generates 23,000 jobs in the city. Visit York’s tourism strategy focuses on income generation and visitor spend rather than volume and visitors already generate £443m of income for York annually. These proposals would need to be very carefully considered in light of this and we could only give a full response once all the issues have been debated."
A Council report reacting to the commission proposals, authored by Jane Collingwood, strategy and development officer for the chief executive, declared the tax raised 'conflicting issues' which would need to be addressed before any implementation.
The commission's report will be discussed in a York City Council Cabinet meeting on Tuesday 14 February.