Mayors and local leaders are to be given the power to introduce and Overnight Visitor Levy.
The government has said that the levy will be charged as a percentage of the cost of the accommodation, not as a flat fee.
The money will benefit tourist areas with the money being invested back into the community to support regional tourism, help manage the footfall of visitors, and improve areas for those living there.
Secretary of State for Housing, Communities and Local Government 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."
Steve Rotheram, Mayor of the Liverpool City Region, said: "This is something I’ve been calling for over many years, so I’m really pleased the government is taking forward plans to give Mayors the power to introduce a visitor levy locally
"Our visitor economy is already worth more than £6.8bn a year and supports more than 55,000 jobs across the Liverpool City Region. A modest levy on overnight stays could potentially raise up to £18m a year – money that would stay here and be reinvested directly into the events, culture, experiences and infrastructure that bring millions of visitors to our region.
"Visitor levy mechanisms are often used in many great cities across the globe to improve the visitor offer and attract even more people to enjoy the experience.
"It would give us more money to support the things that make our visitor economy such a success, while helping our businesses and communities to benefit from its continued growth.
"We’ve shown time and again that local people know what our area needs far better than someone sitting behind a desk in Whitehall. I look forward to working with government as these powers are developed to make sure we get a system that is fair, workable and delivers the greatest possible benefit for our region."
