Tourists to London’s Oxford and Bond Streets are used to parting with their cash, but they could soon find themselves embroiled in a more complex financial transaction.

Under plans to levy a charge on overnight visitors, the government is encouraging England’s mayors and local leaders to borrow against tourist stays. They’d be leveraging income from the new tax to pump money back into their regions.

Prime Minister Andy Burnham told business leaders at the governing Labour Party’s annual conference in Liverpool that mayors would be able to use the revenue that way — and compound the benefits of an income stream that leverages the £64.3 billion ($84.8 billion) tourism industry.

“The prime minister did refer to the visitor levy this morning unprompted,” British Chambers of Commerce’s Shevaun Haviland told reporters during the conference’s business day, at which the government fields questions from executives. According to Haviland, whose organization represents over 50,000 firms in the UK: “He referred to it in respect of it being a revenue stream for the mayors to help develop those cities for visitors, which obviously is good for business — and to borrow against.”

A government spokesperson didn’t respond to questions about how mayors could financialize the income, but called the plans “part of a historic devolution drive that shifts power out of Westminster and into local hands.”Last month, the UK government confirmed plans to allow local leaders in England to impose the tax — whose level will be determined locally — and to decide how to spend the revenue. Legislation hasn’t been tabled yet, but the government has said it expects local areas to set out their plans by early 2028.

That means plans for borrowing against those pledges are necessarily embryonic. But mayors can look to international precedents. Some Texan cities have issued bonds secured by future hotel revenues, while in Paris, bonds for local transport infrastructure are funded from income that includes taxes on tourists.

City Minister Lucy Rigby said at a panel event in Liverpool that she would expect more mayors to go overseas to find investment, as the government’s devolution agenda evolves.

Local governments have already been able to borrow against future revenues to fund infrastructure projects. Thomas Pope, chief economist at the Institute for Government, said that the extension of the London Underground’s Northern Line to Battersea harnessed future business rates revenues in a similar way.

“Borrowing against the overnight visitor levy could allow mayors to do more with the money, for example investing up front in infrastructure that might improve tourism in their region,” Pope said.

Scotland already implements a tourism tax, with Edinburgh first to introduce it in July, at a 5% charge on paid overnight accommodation such as hotels and Airbnbs. Still, some of England’s regions have said they won’t follow suit for fear of deterring tourism.

The tax is also strongly opposed by the hospitality industry, and has been rejected by the Conservatives and Reform UK. Partisan opposition could cast a pall on the long-term viability of an arrangement that will need to outlast changes in government.

“Lending against a holiday tax would be a bad credit decision,” said Allen Simpson, chief executive of UKHospitality. “I am going to write to all banks to remind them that it has been reported that both major opposition parties would scrap the tax. Therefore, no loan or bond issues against it can be considered sage, given the very real possibility that the tax revenues could simply disappear and lead to default.”

Borrowing at a local level has a checkered history in the UK. Some councils overextended themselves during the 2010s by borrowing to buy commercial properties such as shopping centers and offices, only for those investments to turn sour.

But England received 42.6 million overseas visitors in 2024, making it the 9th most visited country in the world, according to UN tourism. Those tourists spent an estimated £31.6 billion that year. And the tax will apply to British visitors holidaying in other cities too, who according to the most recent official data marginally outspent their overseas peers.

The new levy, first conceived under former Prime Minister Keir Starmer, dovetails with the devolution agenda of Burnham — himself a former mayor of Greater Manchester. He’s pledged to give local areas more fiscal autonomy.

Cities like Barcelona, Venice and Amsterdam already impose similar taxes. And for London visitors annoyed by them: For now, the British museum is still free.