A 4.5 per cent fee on guests using Airbnb-style holiday rental properties could raise up to $750,000 this financial year, MPs heard on Friday.

Jamahl Simmons, the Minister of Economic Development and Tourism, told MPs the new levy would be given to the Bermuda Tourism Authority to help offset its costs.

But he added “that this vacation rental fee is 4.5 per cent of the gross paid by the guest for the accommodation and is not a fee imposed on the proprietor of the vacation rental property”.

Mr Simmons explained that hotel guests pay a Bermuda Tourism Authority fee of 4.5 per cent of the gross room rate charged by the hotel.

He said: “This direct revenue contributes over $7 million in income to the BTA annually, which in return reduces the taxpayer burden of funding the Bermuda Tourism Authority.

Mr Simmons added: “The ministry concluded that adding a similar fee for guests staying in vacation rental properties would enable the Government to further reduce grant funding to the BTA.”

He was speaking as MPs backed legislation to create the new tax. Mr Simmons said the finance ministry estimated that the fee could raise $750,000 during the 2018/19 financial year.

He explained the fee would be collected from guests on or before departure by the owner or operator, or the owner’s agent. He added: “This additional fee would also incentivise the authority to directly support the growth of this important sector of our tourism economy.”

Opposition MPs questioned whether the extra charge would put tourists off visiting Bermuda.

Leah Scott, deputy Opposition leader, said she had “mixed emotions” about the legislation.

Ms Scott said: “Although the tax is to be paid by the visitor, will they want to pay that tax?”

She added: “Is that enough of a deterrent to prevent people from wanting to come to the island?”

One Bermuda Alliance backbencher Patricia Gordon-Pamplin, who has an Airbnb property, said she would rather pay the 4.5 per cent herself.

She added: “I would not have a problem paying the extra 4.5 per cent as the host, as opposed to saying, let my guests who are going to come, pay 16 per cent now.

“They might decide not to come. Whereas I might have 80 per cent occupancy, I might go down to 50 per cent occupancy.”

Progressive Labour Party backbencher Zane DeSilva said that Ms Gordon-Pamplin could lower the rental price of her Airbnb by 4.5 per cent.

He added: “Maybe that would make up for it.”

Mr DeSilva added that “anyone that travels knows that whether you are staying at Motel Six or you are staying at Bellagio, when you get your room bill at the end of your stay, you are going to have some taxes tacked on”.

He said that by the time visitors experienced the hospitality Bermuda is known for “I don’t think that this small fee is going to stop them from coming back”.

Junior finance minister Wayne Furbert, and PLP backbenchers Kim Swan and Christopher Famous also backed the Bill. Mr Famous said that the BTA had failed to live up to its promise of becoming self-sufficient within three to five years and was instead a drain on the public purse.

He added: “We, as a responsible government, have to balance the budget. If this money is used towards balancing the cost of the BTA, then I am all for it.”