For immediate release: 11th February 2022
The Wales Tourism Alliance, which speaks for different types of tourism businesses across the whole of Wales, was disappointed to learn that Welsh Government remains determined to push to ahead with ‘Next step in the development of tourism tax’.
The announcement confirmed their intention to resurrect the idea of a tourism tax to be introduced through local government financing reform without taking into account the real impact on the industry, which is already more heavily taxed than in other countries
Suzy Davies, Chair of the WTA said:
“We do not understand why the Welsh Government is insisting on pushing ahead with this proposal, especially now. This will simply apply extra financial pressures on the hardest-hit, slowest-recovering, private sector industry in the Welsh economy.
It is Wales’s second biggest industry, supplying 170,00 jobs, contributing around £6bn a year, the equivalent of over a third of the Welsh Government’s budget. Yet the majority of the industry is made up of micro and small businesses, with modest income. These are the most exposed to current pressures let alone the prospect of an additional tax on their work: These are not big, global corporate players who can just soak up the cost.
“Welsh Government is well aware of the industry’s views on the effect this will have on local businesses, and of course local jobs. It is also aware of the arguments against double taxation; countries with tourism taxes have lower rates of VAT on tourism businesses than on their other activities …and certainly lower rates than we have in the UK. While Welsh Government cannot alter VAT, it can certainly avoid making the tax burden worse
“Tourism businesses are not responsible for the years of underfunding of councils - they contribute directly through business rates, higher fees for services and good maintenance of their properties. They also contribute indirectly by supplying customers for local businesses and jobs for local council tax payers. The services which this tax is said to finance are exactly the same services which residents themselves need - and the existing way of distributing funding to councils already takes into account visitor numbers in assessing how much money they need for some of those services.
“It’s also hard to see how this fits in with other Welsh Government policy, which actively seeks more overnight stays in Wales. Overnight visitors contribute more per head to the Welsh economy than day visitors, with less reliance on transport infrastructure and, so, damage to the environment. This tax targets those overnight visitors for a problem which is not of their making - and encourages an increase in day visitor behaviour, which is what Welsh Government is trying to move away from!
“It may also ask what impact this may have on the choices of lower income families, many from within Wales itself of course. For some, the principle rather than the actual cost will be a deterrent, but every penny of an unnecessary tax is a penny less to be spent on the holiday itself or in a local shop or restaurant.
“There are no plans to ringfence any income raised. Even if that were to change, there is no guarantee that it would be treated as additional income for relevant services: Councils could just as easily displace current spending, diverting that to their other responsibilities.
“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.
“The covid boom in staycations is not business as usual and no decisions should be made on the back of this unusual spike in domestic visitor numbers in particular hotspots.
“The real solution is to address the bigger issue of under-tourism, which is a more accurate reflection on Wales as a whole. Welsh Government tourism policy might focus harder on reminding visitors that there is far more to this glorious country; encouraging the development of new businesses that generate new opportunities and much needed rural and coastal jobs outside the much-promoted honey pots. The push on industrial heritage tourism is still a slow one.
“To even contemplate a tourism tax when businesses are rebuilding after the worst of the pandemic is a classic example of the lack of joined up thinking:
“Our businesses are facing rises in overheads, particularly with regard to energy costs and at a time of supply 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 have faced perpetual uncertainty about covid restrictions at a time when they are trying hard to meet deferred demand and, so, limited availability for new visitors - visitors who may now be thinking twice because of their own worries about the cost of living. Place this alongside an increasingly demanding clientele and we have the perfect storm’.
‘We call on the Welsh Government to join up its thinking and drop this proposal…
Note to Editors: Further information on the WTA can be found on Wales Tourism Alliance website: - http://www.wta.org.uk. Further contact e-mail firstname.lastname@example.org.