Visitors to Wales will not have to pay a tourism tax for "years" as fears were growing about the levy coming in during the cost of living crisis.
Welsh Government is proposing giving councils the powers to add a tax on overnight stays in their part of the country - saying it can ease pressure on tourism communities and help pay for additional services.
It has triggered a backlash from the sector over the potential impact on businesses and jobs with a view it will drive some visitors to rival destinations.
Concerns had also been raised about this coming in during a cost of living crisis as consumers look to tighten their belts - as well as when businesses were just starting to recover from the pandemic and are dealing with their own spiralling costs.
Some media reports had sparked fears the tax would be imposed as soon as this year once a consultation is completed while others thought it may be in place from the start of the next financial year on April 1 2023.
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Business Live has made enquiries on this and has been told it will be "years" before a tax is brought in - with one source saying it could well be closer to the end of the current Senedd term of 2026. The initial consultation is not taking place until the autumn and it could well be early next year before the results from that are available.
The next stage would be developing proposals - with a potential further consultation - and then looking at drafting this into legislation, which would need to go through the Senedd.
Assuming it is passed with support from Labour and Plaid Cymru the delivery implementation would still be a long process. A final factor will be the democratic process in local authorities as while it is a Welsh tourism tax the current indication is that local authorities will have the final say on if it is used in their county. So it would have to be voted on by individual councils.
Given that the wheels of governments at all levels tend to move slowly then it will be a number of years before visitors have to pay extra to stay in Wales.
This will ease some worries for businesses over the imposition of the tax although certainly won't change the minds of a vast majority of the sector on the tax itself.
A Welsh Government spokesperson said: “Visitor levies are common place across the world, with revenues used to the benefit of local communities, tourists and businesses. We will take all views on board as part of the consultation process this Autumn.
"The careful process of developing proposals for a levy, translating them into legislation, and then into delivery and implementation spans years, and will be subject to approval by the Senedd.”
The industry brings a substantial economic contribution to Wales with tourism-related expenditure reaching more than £5bn annually in 2019 but also puts pressure on the infrastructure of local communities.
The Welsh Government has been asked to produce evidence to support the move ahead of a consultation this autumn.
Minister for Finance and Local Government Rebecca Evans has approved funding for three research projects to support the development of the tourism levy.
They will look at:
- Research into the economic impacts of a tourism tax in Wales.
- Overview of the tax systems in other tourism areas around the world where these taxes are in place.
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Analysis of the demographics of the accommodation sector in Wales.
Mark Drakeford, Wales’ First Minister, believes a tourism tax can help ease the burden on local ratepayers, who he claims currently underwrite many of the services and facilities that visitors enjoy, from car parks to toilets.
But tourism operators point out that visitors already bring in additional money for local areas. This ranges from extra business rates from tourism related firms to council tax premiums on second homes. There is also the Enhanced Population Grant, which allocates extra money from Welsh Government based on the number of visitors to a county. In addition visitors also pay to use car parks and sometimes toilet facilities - directly helping to fund them.
North Wales Tourism chief executive Jim Jones has said he found it “staggering” that Welsh Government are still talking about a tourism tax.
He said: “A tax on tourism would be a hugely regressive step that would damage and industry that is already reeling after being battered by the pandemic."
Chair of Wales Tourism Alliance Suzy Davies has said that a tourism tax would not help in creating a “welcome to Wales” message that will attract tourists to the country.
“All tourism tax countries have much lower rates of VAT for tourism products in those countries,” she said.
“But the prospect of a 20% VAT rate plus the tourism tax, however modest, is not great news for tourism in GB, let alone Wales.
“And again it does not help us with that ‘Wales really wants you, welcome to Wales’ message that we need to be pushing at the moment.”
Rebecca Evans, Minister for Finance and Local Government, said: “Visitor levies are a common feature in tourist destinations internationally. They are an opportunity for visitors to make an investment in local infrastructure and services, which in turn make tourism a success. Without such a levy, local communities face an undue burden to fund local services and provisions on which tourists rely."
