Tourism tax delayed by cost-of-living crisis
WELSH Government plans to introduce a tourism tax will be held back until the costof-living crisis subsides and towards the end of the current Senedd term.
The Cardiff Bay administration is proposing giving local authorities powers to add a tax on overnight stays.
However, the plans have triggered a major backlash from the sector over the potential impact on businesses and jobs with a view it will drive some visitors to rival destinations.
Concerns had also been raised about this coming in during a cost-ofliving crisis as consumers look to tighten their belts – as well as when businesses were just starting to recover from the pandemic and are dealing with their own spiralling costs.
There has been speculation that a tourism tax could be imposed as soon as this year or the start of the next financial year from spring 2023, once a consultation is completed.
However, a source said it could well be closer to the end of the current Senedd term of 2026. The initial consultation is not taking place until the autumn and it could well be early next year before the results from that are available.
The next stage would be developing proposals – with a potential further consultation – and then looking at drafting this into legislation, which would need to go through the Senedd.
Assuming it is passed with support from Labour and Plaid Cymru, the delivery implementation would still be a long process.
A final factor will be the democratic process in local authorities as while it is a Welsh tourism tax the current indication is that local authorities will have the final say on if it is used in their county. So it would have to be voted on by individual councils.
A Welsh Government spokesperson said: “Visitor levies are common place across the world, with revenues used to the benefit of local communities, tourists and businesses. We will take all views on board as part of the consultation process this autumn.
“The careful process of developing proposals for a levy, translating them into legislation, and then into delivery and implementation spans years, and will be subject to approval by the Senedd.”
Tourism-related expenditure was more than £5bn annually in 2019, but also puts pressure on the infrastructure of local communities.
Minister for Finance and Local Government Rebecca Evans 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;
■ Overview of the tax systems in other tourism areas around the world where these taxes are in place; and
■ analysis of the demographics of the accommodation sector in Wales.
First Minister Mark Drakeford 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.
North Wales Tourism chief executive Jim Jones has said he found it “staggering” that 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.”
Chair of Wales Tourism Alliance Suzy Davies has 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.”
If the Welsh Government introduces a tourism tax the UK Government said revenues raised would be additional to its block grant.