In the cut and thrust of your reply to Darren Millar's question on a possible tourism tax, some key points may have been overlooked. I noted that you made the point that many countries applied taxation to tourists. That is certainly the case, but what is important is the totality of the tax burden faced by tourism businesses. In comparison with most European countries which levy reduced rates of VAT on overnight accommodation, our businesses in Wales face the full 20% rate. Moreover many have been faced with significant business rate increases.
A key point too is that a tourism tax which in the UK was unique to Wales would affect our competitive position vis a vis the rest of the UK. You say that such taxes do not affect demand. That is only true if businesses can absorb the taxation without raising prices. Given the small margins in this very competitive industry which prevail in Wales, that will not be the case. Prices will rise and Wales will gain the unenviable reputation of being the only country in the UK which charges its visitors to stay. This will damage the growth potential of the industry at a time when post Brexit it may be called upon to play an even greater role in the Welsh economy.
I do, of course, acknowledge as you pointed out that the industry imposes additional costs on local authorities. Your formula for allocating financial support to local authorities makes explicit provision for such costs. The Wales Tourism Alliance is seeking a meeting with the Welsh Local Government Association to discuss the whole issue including ways in which the industry may be able to help. I would add that while imposing additional costs on local authority services, tourism also helps to sustain a wider range of facilities for residents to enjoy than would be the case without the industry.
Finally, could I welcome the undertaking given by the Cabinet Secretary for the Economy and Transport to consult fully with the industry on the proposal to introduce a Tourism Tax. This will give the Alliance and other organisations an opportunity to elaborate further on how damaging this will be for the industry and the economy of Wales and that consequently it should not proceed.
Chair - Wales Tourism Alliance