Welsh Government has commissioned three research projects into a potential tourism tax for Wales.
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.
They 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 cost of living crisis that is affecting households and businesses. They say it will damage the sector and lead to job losses.
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The industry brings a substantial economic contribution to Wales with tourism-related expenditure reaching more than £5bn 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.
Now 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.
Analysis of the demographics of the accommodation sector in Wales.
North Wales Tourism chief executive Jim Jones has said he found it “staggering” that Welsh Government are 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.”
Rebecca Evans, Minister for Finance and Local Government, 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, which in turn make tourism a success. 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.
But tourism operators point out that visitors already bring in additional money for local areas. This ranges from extra business rates from tourism related firms to council tax premiums on second homes. There is also the Enhanced Population Grant, which allocates extra money from Welsh Government based on the number of visitors to a county. In addition visitors also pay to use car parks and sometimes toilet facilities - directly helping to fund them.
On the research projects, a Welsh Government spokesperson said: “The three projects include secondary research on the economic impacts of a tourism levy in Wales; an overview of the tax systems facing the visitor economy in selected countries; and an analysis of the demographics of the accommodation sector in Wales.
“The research will further build the evidence base to inform policy making and ensure any levy brings maximum benefits for local communities, tourists and businesses.”
