/Mixed reaction to Tourist Tax idea

Mixed reaction to Tourist Tax idea



(Title Image: The Times)

The Issue

In the 2018-19 budget, the Welsh Government put forward proposals for four new taxes – one of which would go forward for consideration by the UK Government.

Amongst those four proposals was a “tourist tax” – a small surcharge which would be added to the per-night price of accommodation and (presumably) used to offset some of the negative aspects of tourism as well as fund investments in tourist facilities.

The Welsh Conservatives oppose the idea and used their weekly debate to highlight the issue.

The Motion

The Senedd:

  •  Does not believe that a tourism tax should be implemented in Wales.

Key Points

Shadow Finance Minister, Nick Ramsay AM (Con, Monmouth)
For (the motion): We don’t know the effect it could have on the industry.

  •  Plaid Cymru has a confused position on a tourist tax and wants to avoid talking about it; Adam Price voiced support for it only for the group to decide it was a bad idea.
  • The Bevan Foundation – who raised the idea – don’t know what the impact would be, while the proposal has been met with widespread criticism from the tourist industry.
  • Worried it could see people staying near the border deciding to remain in England.
  • The tax is regressive and tourism businesses already pay 20% VAT.

Steffan Lewis AM (Plaid, South Wales East)
For (in principle): Would prefer a disposable plastics tax instead.

  •  A tourist tax “is not Plaid Cymru” policy; put forward an amendment to support a disposable plastics tax (which was rejected).
  • The tourist industry has a disproportionate tax burden due to high levels of VAT; Plaid wants it cut to 5%.

Angela Burns AM (Con, Carms. W & S. Pembs.)
For: It could put off visitors.

  •  The tax would have a serious impact on visitor numbers and tourism-related jobs; tourism employs a higher proportion of the Welsh workforce than the other Home Nations.
  • Comparisons with other countries are not like-for-like as they have higher bed occupancy rates than the UK.
  • We would be “less attractive than Cornwall” to UK visitors.

Neil Hamilton AM (UKIP, Mid & West Wales)
For: The UK is poor value for money for tourists already.

  •  The UK is facing its highest tax burden since 1986 (Institute for Fiscal Studies).
  • The UK ranks 135th of 136 nations on price competitiveness in tourism so even an extra £1-2 would make Wales less attractive.
  • Tourism taxes work in places where tourist demand is constant throughout the year.

Suzy Davies AM (Con, South Wales West)
Declared Interest: Husband is a partner in a tourist business.
For: Even if it’s small, the tax will be noticed.

  •  Members of a cross-party tourism group are “very, very nervous”.
  • You would notice the tourist tax if you’re on a tight budget.
  • Tourist tax in Catalonia was divisive and primarily done to raise funds following the Great Recession and resentment against high prices driven by tourists.

Welsh Government Response

Local Government & Finance Secretary, Mark Drakeford (Lab, Cardiff West)

  •  The debate was “disappointing” because the Conservatives are attempting to close it down; the views of one political party shouldn’t be imposed without a chance for proper debate.
  • The tourism tax is only at the idea stage.
  • Finds it hard to believe that someone seeking an overnight stay in Pembrokeshire would choose to stay in Hereford over an extra £1 a night.
  • A new tax will be shortlisted early in 2018.

Vote


A Welsh Government-backed amendment which noted that the tourism tax was an idea raised by the public and still at the idea stage was passed by 27 votes to 17 with 9 abstentions.

Comment

I have to agree with Mark Drakeford as from what I read this was a poor debate and a missed opportunity; the fact Nick Ramsay was attacking Plaid straight out from the blocks said it all, sadly.

Tourism has a fluffy image but has its downsides.

Some examples that immediately spring to mind include rescuing and treating people who get stuck up Snowdon in shorts and t-shirts (or dragged out to sea by a rip-current), drunken hen and stag parties galavanting through Tenby, rubbish strewn across Barry Island on the first sunny day of the summer, clean-ups after major events in Cardiff, low wages and seasonal jobs for the workforce and second home ownership killing smaller rural villages.

All this – and more positive investments like tourism promotion, accommodation upgrades and improved facilities – has to be paid for somehow; so why shouldn’t the people making use of it pay a bit extra? Tourism is after all, at heart, about luxury.