West eyes Welsh plans to launch tourism tax
THE Welsh Government has commissioned three research projects into a potential tourism tax for Wales, in a project which will be watched with interest in the West.
Labour and Plaid Cymru are pressing on with a consultation on the proposal to allow individual local authorities to introduce a levy on visitors – most commonly imposed on nights spent in hotels, B&Bs or self-catered holiday lets.
The parties have come under fire from the sector and Welsh Conservatives for the move to add taxes to the sector, particularly as it follows the pandemic and given the current costof-living crisis that is affecting households and businesses. Critics say it will damage the sector and lead to job losses.
The industry brings a substantial economic contribution to Wales, with tourism-related expenditure reaching more than £5 billion annually in 2019, but also puts pressure on the infrastructure of local communities. The Welsh Government has been asked to produce evidence to support the move ahead of a consultation this autumn.
Bath has previously considered introducing some form of tourism tax and other areas popular with tourists such as the Cotswolds, Somerset and Dorset will be watching what happens in Wales carefully.
Rebecca Evans, Minister for Finance and Local Government, has approved funding for three research projects to support the development of the tourism levy.
They will look at research into the economic impacts of a tourism tax in Wales; an overview of the tax systems in other tourism areas around the world where such taxes are in place; and analysis of the demographics of the accommodation sector in Wales.
North Wales Tourism chief executive Jim Jones has said he found it “staggering” that the Welsh Government is still talking about a tourism tax.
He said: “A tax on tourism would be a hugely regressive step that would damage and industry that is already reeling after being battered by the pandemic.”
Suzy Davies, chair of Wales Tourism Alliance, said that a tourism tax would not help in creating a “welcome to Wales” message that will attract tourists to the country.
“All tourism tax countries have much lower rates of VAT for tourism products in those countries,” she said, “but the prospect of a 20% VAT rate plus the tourism tax, however modest, is not great news for tourism in GB, let alone Wales – and, again, it does not help us with that ‘Wales really wants you, welcome to Wales’ message that we need to be pushing at the moment.”
Ms Evans said: “Visitor levies are a common feature in tourist destinations internationally. They are an opportunity for visitors to make an investment in local infrastructure and services. Without such a levy, local communities face an undue burden to fund local services and provisions on which tourists rely.”
Mark Drakeford, Wales’ First Minister, believes a tourism tax can help ease the burden on local ratepayers, who he claims currently underwrite many of the services and facilities that visitors enjoy, from car parks to toilets.
However, tourism operators point out that visitors bring in additional money for local areas. This ranges from extra business rates from tourismrelated firms to council tax premiums on second homes.