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The landlord of Britain’s best pub says the new Labour tourist tax “will put people off” staying in hospitality venues. Holidaymakers across England face a possible new levy on overnight stays under Government plans to give mayors more economic power in their regions.

Local leaders will set the fee as a percentage of the cost of accommodation, rather than a flat rate, which ministers argue will protect budget trips. The levy will have no upper limit and London’s Labour Mayor, Lord Sadiq Khan of Tooting, said he “strongly” welcomed the plans. But hotel and tourism firms have warned the uncapped proposals will be “hugely damaging” and hit British holidaymakers hard. Pub trade bodies have also warned the measures could hit struggling venues which have invested in rooms to help their bottom line.

Landlord George Greenaway and his wife Louise run the delightful Tamworth Tap in Tamworth, Staffordshire, which was crowned the Campaign for Real Ale (CAMRA) Pub of the Year for a record third time this year. Thirsty drinkers come from all over the country, and from abroad, to sample the delights of the venue – which also features a stunning view of Tamworth Castle in the beer garden.

Mr Greenaway said Labour’s new tax appeared to be “giving with one hand and taking away with another” in reference to a previous business rate cut earlier this year for pubs.

“We have people come from far and wide to our pub and they go around all of the other pubs in the town and stay in the hotels,” he said, “I think this tourist tax is giving with one hand and taking with the other for the hospitality industry, life seems to be one big tax opportunity for this government.

“The timing is not the best, they should really be reassuring the hospitality industry as a whole. It will put people off, say if a seaside town like Brighton had the tax, you might move along the coast to somewhere like Rye to avoid it.”

Mr Greenaway added that he could see the “logic” in a tourist tax for world-famous destinations swamped by increasing numbers. “Places like Venice which attract millions of visitors every year, you can see how it is ideal for them, because of the impact tourism is having,” he added.

Ed Shawcross, owner of the Church Inn, in the Jewellery Quarter, in Birmingham, a city with a Labour Mayor, said he believed a tourist tax was a great way of feeding money back into the local economy.

“We all pay it when we travel abroad and with the current state of the councils finances it should be a much-needed boost,” he said.

“With the tax being paid separately to the hotel booking I think it also clear to consumers that this isn’t an extra charge by the accommodation, but a tax collected by the local authority and that provides a lot more clarity than VAT for example where all the guests see is a total amount on their bill.”

Emma McClarkin, CEO of the British Beer and Pub Association, said many pubs had invested in accommodation to improve their bottom line.

She said: “Given so many struggle to turn a profit under the huge tax burden, and customers are already feeling the pinch, this extra tax – on top of the 20% VAT rate pubs already pay on rooms – really will be felt across the board by people who just want to stay in a nice pub.

“We fear those who will be particularly hit will be rural pubs – and the jobs in those communities – who rely on tourism.

“We urge Mayors to fully assess the impacts before they implement levies and, and if they do choose to bring one in, set it at a low level and ringfence the funds it generates to support pubs and tourism.”

Mayors will decide how to spend the revenue raised from the fee, which will apply to overseas tourists and Britons on so-called “staycations”, rather than money being funnelled back into the Treasury.

Plans for the tax were first announced under Sir Keir Starmer following similar schemes introduced by the devolved administrations in Scotland and Wales.

The Prime Minister, Andy Burnham, has reiterated his commitment to the scheme, framing it as part of his wider devolution agenda aimed at pushing power out of Whitehall.

Gill Haigh is the managing director of Cumbria Tourism, an independent body representing 4,500 members in the tourist industry in the county.

She said: “I understand that it might seem a really easy way to raise money, but we have to understand that England is an outlier in terms of its tourism taxation system.

“Our VAT rate in the tourism sector is 20%. Across Europe, that’s on average, half that rate, 10%.

“So, we’re already a much more expensive destination and what we can’t afford is to become more uncompetitive, if you will.”

Downing Street defended the plans on Thursday amid questions over its impact on cash-strapped households struggling to afford a holiday and businesses during low season. But Tory leader Kemi Badenoch warned the planned tourist taxes on overnight stays will be a disaster for hospitality businesses which she compared to Labour’s raid on VAT-relief for private schools which she said had been a “disaster”.

“I predict a similar thing will happen with a tourism tax,” she said.

“It is a tax on families. It is a tax on a local economy. It doesn’t bring in money. It actually takes business away.”