Spectre of tourism tax raised by Labour-Plaid Cymru pact says Wales Tourism Alliance

The Wales Tourism Alliance, which speaks for different types of tourism businesses across the whole of Wales, has criticised the new Labour/Plaid Cymru Co-Operation Agreement’s approach to tourism.

The document resurrects the possibility of a tourism tax being introduced in Wales through local government financing reform.

Former Welsh Conservative Member of the Senedd, Suzy Davies who is now Chair of the WTA said: “We understand why local communities in tourism hot-spots are anxious but we also recognise the value that balanced tourism contributes to local economies. 

“We understand the anxiety about the effect of a disproportionate number of second homes in some communities.  This is why our members support the principle of
distinguishing between genuine tourism businesses, unregulated holiday lets and second homes which are left empty for much of the year.

“What we do not understand is why this document looks so swiftly and short-sightedly to apply extra financial pressures on the hardest-hit, slowest-recovering, private sector industry in the Welsh economy – to which it contributes £6bn a year, the equivalent of over a third of Welsh Government’s budget.

“Welsh Government is well aware of the arguments against double taxation; countries with tourism taxes have lower rates of VAT on tourism businesses.

“It also knows the industry’s views on the effect this will have on local businesses and, so, local jobs.

“With the level of public spending implied in the new document, it is hard to see a new tourism tax as anything other than a way of diverting existing funds to other priorities. 

“There is no suggestion in current proposals to ensure that any new tax take would be ringfenced, or would be additional to, the extra money that councils already get to meet specific tourism-related aims.

“In reality, the proposals could lead to a contraction in the visitor economy in areas of Wales that are most dependent on the tourism sector.

“It is Welsh Government’s own policies to encourage longer stays with less impact on the environment.  Overnight visitors contribute more per head to the Welsh economy than day visitors, with less reliance on transport infrastructure.  The current proposals target businesses to solve a problem which is not of their making.

“To even contemplate a tourism tax when businesses are rebuilding after the worst of the pandemic is wholly misconceived. 

“Our businesses are facing a perfect storm of rises in the cost of supplies at a time of supplies shortages.  They are supporting rises in the cost of employment at a time of staff shortages. 

“They are taking all the financial risk at a time of a rising cost of living.  And they are facing perpetual uncertainty about covid restrictions at a time when they are trying hard to meet deferred demand and, so, limited availability for new visitors.”