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Tourism could collapse under the Labour Government's proposed holiday tax, a lettings boss has warned. The Overnight Visitor Levy, an additional fee paid to overnight stays in hotels, B&Bs and holiday rentals, is being rolled out across the UK with regional Mayors given the power to implement the charges.

The move was formalised in the King's speech last week and there are concerns it could add as much as £140 to a two-week stay for a family of five. The money will then be reinvested back into local economies, infrastructure and public services. However, Kate Allen, who runs Finest Stays in South Devon, described the new levy as "just another stealth tax" and slammed the government for taxing tourism "out of existence".

Ms Allen told The Mail on Sunday: "I don't think they have worked out how it is going to be charged - whether it is a percentage of the rental price or a per person or per room, per night situation because we are dealing with very expensive holiday lets and a percentage would be catastrophic."

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Holiday or tourist taxes are already being levied in cities across Europe. Amsterdam currently has the highest rate, imposing a 12.5% tax on the cost of hotel rooms, while the compulsory levy in Paris depends on the cost of the accommodation, with an additional €10.73 added per person, per night for a five-star hotel.

According to Ms Allen, it was disingenuous of the Government to point towards these examples in Europe.

She said: "We pay double the VAT of our European competitors. When you talk about visitor levy and you go abroad, it has a different impact on the industry. We are already taxed to high heaven."

A recent UK hospitality poll revealed the new tax would reduce the chance of 73% Brits going on holiday. It comes as businesses are already struggling to fill rooms amid the rise of unregulated lettings.

Peter Robinson, a tourism operator in Cornwall, said bookings were already down 16% year on year. He added that any any additional tax would inevitably "increase the cost of holidays for hard-up families".

He explained: "It's quite difficult for businesses to attract people already. This is going to add to the difficulties of us in Cornwall competing with people flying to Tenerife."

On the other hand, Jayne Kirkham, Labour MP for Truro and Falmouth, said the money could be important for the county due to the strain tourism puts on local services such as the NHS and police force.

She said: "From that point of view, it does make sense, but of course we have a tourism economy which is fantastic and we have to listen to industry voices and see if they think it will have an impact."