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YesCymru Milford Haven - Tourism Tax

Hot on the heels of our report last month which laid out Welsh Government plans to increase council tax premiums and the number of days that holiday lets can operate before they are entitled to claim business tax relief, this week we will focus on the controversy surrounding a proposed tourism tax for Wales.

For those not familiar with the concept, tourism taxes are defined by Responsible Travel as, “small fees usually levied indirectly through accommodation providers or holiday companies, and typically aimed at overnight visitors”. 

Tourism taxes are designed to help mitigate the effects of over-tourism, particularly on public services, such as roads, rail infrastructure and other modes of public transport, hospitals, fire and rescue services and refuse collections. 

A tourism tax was first touted in Plaid Cymru’s 2021 pre-senedd election manifesto, and has since been adopted as one of the policy areas of the Plaid-Labour Co-operative Agreement, announced in November of last year. 

In February 2022, plans were outlined to launch a formal consultation on the proposal during the autumn in a document titled, “Next step in development of tourism tax”. 

While Welsh Government recognises that tourism provides Wales with a substantial economic boost, with “tourism related expenditure” having reached more than £5bn in 2019, it is important to note that local people can also be negatively impacted by the effects of tourism such as, pollution and increases in rent and house prices. 

Indeed, Wales has seen some of the steepest house price rises across the UK since the onset of the pandemic, and according to data from the Land Registry, house prices in Wales averaged £212,990 during April 2022. The average UK house price for the same period was recorded at £281,161. 

Meanwhile, Rightmove data released in April, also showed that Wales saw the second highest rise in UK rental prices, behind London. 

However, despite this, the concept of a tourism tax remains a relatively contentious issue in Wales with former Wales Secretary, Simon Hart, having branded the scheme as an attempt to “try and exploit businesses in Wales as they seek to recover post-Covid”. He has repeatedly called on the Welsh Government to ditch plans for a consultation. 

However, is the criticism justified? And is it fair to say that the tax will hit Wales’ £5bn tourism economy? 

Research shows that the use of a tourism tax is common amongst many popular tourist destinations across the world, including the United States. 

In Europe, Venice, Barcelona and Amsterdam have all employed a tourism tax to help address the adverse effects of the “overtourism”. 

Even here in the UK, the proposal has been mooted in Birmingham and Edinburgh, with the latter only having delayed its implementation due to the Covid-19 outbreak. 

As for pricing, tax rates across Europe range from €2 in Bruges to up to €10 a night in Venice.

Tax rates in Paris vary depending on the star rating of the hotel, and use of the tax is common across France, however this has not prevented the country from being the third largest tourism destination in 2019, according to The World Tourism Organization. 

As already pointed out, tourism taxes are designed to help pay for local services and enhance the areas that tourists are visiting, through refuse collections, and maintenance of parks and coastal paths.

A tourism tax will provide councils in Wales with vital revenue to re-invest in local services and infrastructure so that these areas can be better enjoyed by tourists and local people alike.

This is an article written by Maria Pritchard of Yes Milford Haven and published in the Pembrokeshire Herald newspaper on 22.07.2022

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