Mayors and local leaders in England will be given new powers to introduce a 'tourist tax' on visitors staying overnight.
The "overnight visitor levy", first proposed in November, will be charged as a percentage of the cost of accommodation, rather than as a flat fee.
Per a press release, the new step in fiscal devolution will put England in line with other countries where similar levies are in place, including in major cities in Germany, Italy, Canada and the US.
It is being introduced to benefit England's tourism hotspots by investing money back into their communities, supporting regional tourism, helping manage visitor footfall, and improving areas for residents.
Mayors and leaders can decide whether to introduce a levy and how the revenue should be invested in their communities, in consultation with residents and local businesses.
Communities secretary Angela Rayner said: "Our amazing towns and cities, and our picturesque rural and coastal communities welcome millions of visitors every year – local leaders should have the power to make the most of that popularity.
"This measure will give mayors the choice to raise and reinvest funding where it’s needed most.
"It’ll help support the local services, public spaces and attractions that both residents and visitors rely on, with decisions taken by people who know their area best."
Sadiq Khan, London's mayor, said the measure "needs to happen sooner rather than later", adding that he has "long argued that London should have the same flexibility as other major global cities to raise and invest funding locally".
The government has not set a cap on the levy percentages, but Khan told BBC London that the city's would not be above 5 percent of the cost of an overnight stay.
The World Museum is the oldest of the museums and galleries in Liverpool, opening in 1853National Museums Liverpool
Labour's regional mayors in England have also pledged to cap the levy at 5 percent, after leading trade body UKHospitality warned the initiative could impact businesses and jobs (via the BBC).
"We know, don't we, that local government is struggling for funds – it was hit very hard by austerity," Allen Simpson, UKHospitality's chief executive, told BBC Radio 4's Today programme.
"If you only devolve one tax raising power, of course local mayors are going to pull that lever until it snaps."
Tristram Hunt, director of the V&A, has been campaigning for a tourism levy since 2018.
He welcomed the initiative and said it "offers city mayors and local leaders across the UK a transformative chance to support museums, galleries and visitor attractions".
"The culture sector now looks forward to working with mayors and councils to access much-needed investment to expand national and international audiences," he added.
Laura Pye, director of National Museums Liverpool, said a tourist tax would "further improve the region for local people and tourists alike".
Councils in Scotland already have the power to introduce local overnight levies, while Wales will bring in a visitor levy from next year.
In England, the measure is expected to be introduced before the end of the current parliament in 2029.
