The tax may be used to make some of London’s attractions free for all.

London tourism tax
Credit: Leonid Andronov/Getty Images

The city of London is considering implementing a “tourist tax” that would increase nightly rates at hotels by 5 percent.

“London is the number one destination for tourists in the world," London Mayor Sadiq Khan said in a press conference last week. "Hotels do very well out of that. What we're saying is when the tourists come they opt to pay a small level which will help improve the city."

A report from the Greater London Assembly (GLA) said that tourists create an “additional demand on public services such as the public transport network, street cleaning, policing and health services.”

The 5 percent tax could generate an additional £240 million ($302 million) for the city. Money raised from the bed tax could be put towards making some of London’s cultural attractions free for all—or it could also be used to “support a reduction in other taxes,” according to the GLA.

The city of London has over 2,100 hotels and 150,000 hotel rooms. There are also 25,000 Airbnbs available for rent.

Some leaders in the hospitality industry are critical of the tax, saying it will drive tourists away. “A bed tax, however small, will discourage guests from staying overnight and reduce the amount they spend in the wider London economy, impacting shops and restaurants as well as hotels,” the British Hospitality Association said in a statement.

However the tax is not an immediately pressing issue for tourists. The proposition would require new legislation from Parliament, which would likely take a while to pass.

Berlin implemented a 5 percent tax on tourists in 2014. The tax was controversial at the time and was battled by the German Hotel and Restaurant Association. Business travelers to the city are exempt from the tax, however they must prove that they are in the capital doing business.