The WTA, whilst welcoming Conwy County Borough Council's plans to make tourism in Conwy a billion pound part of the economy, has expressed alarm at reports of Councillors wanting to look at a new tourism tax and a charge of £1 per head.
Andrew Campbell, Chairman of the WTA said, 'Where Tourism Tax is applied, it has been in destinations with 'too many' visitors and is used as a means of controlling numbers. Despite its popularity, surely Conwy does not want to curb visitors? Most European countries have chosen to significantly reduce the VAT on their tourism industries to encourage growth, employment and revenue. The imposition of higher taxes in Conwy could inhibit growth, employment, revenue and holiday-taking. Seriously, a Tourism Tax for Conwy'?
A tourism tax must be understood in the wider tax context. The UK imposes one of the highest rates of taxes on its tourism industry. As a consequence the UK is ranked by the World Economic Forum (2015) as 140th out of 141 countries for price competitiveness in the tourism industry.
The existing tourism tax burden includes high rates of VAT and Air Passenger Duty (APD), which undermine the sector’s potential to contribute to the national economy, damage growth and stifle job creation. The World Travel and Tourism Council (WTTC), the leading authority on world travel and tourism, has produced several influential pieces of work highlighting the negative impact of tax and the tax burden on the tourism sector. Authored by the well-respected Oxford Economics (who produce much of the economic analysis/data utilised by government at all levels), the reports demonstrate that:
The Welsh tourism industry is largely made up of micro businesses/SMEs and the sector is vitally important to rural as well as urban economies, enhancing the provision of facilities and amenities, which are accessed by residents and visitors alike. In Wales, 25% of all VAT registered businesses are in the visitor economy, which has proved to be highly resilient in the face of austerity, offering significant employment opportunities where alternatives are very limited. Levying additional tax on a priority sector is ill informed and would be counter to policy in most other European countries, which have actively sought to cut tourism tax to stimulate tourism growth, tax revenue, GDP and employment.
Clearly, what amounts to an accommodation tax (as it is simply not possible to tax day visitors) in other European countries operates in a much less punitive tax environment, with UK VAT rates more than double most of its competitors.
Recognising the VAT tax burden, Plaid Cymru’s 2017 manifesto included a reduction in tourism VAT to 5% as an explicit policy, stating that existing tourism taxes are “unfair”. Liberal Democrat policy also supports a cut in tourism VAT. From a social equality perspective this tax would punish those least able to pay, those who already struggle to take any kind of holiday, which is regarded as a human right and right of citizenship. It would also make tourists less likely to choose Wales, opting instead for one of its competitor UK destinations.