Senedd Cymru | Welsh Parliament
Y Pwyllgor Cyllid | Finance Committee
Bil Llety Ymwelwyr (Cofrestr ac Ardoll) Etc. (Cymru) | Visitor Accommodation (Register and Levy) Etc. (Wales) Bill
Ymateb gan Bwthyn Velvet a Jasmine | Evidence from Velvet and Jasmine Cottage
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The general principles are laudable. Day trippers to Wales contribute nothing to the local economy and are a drain on local resources. Sustainable tourism is a fine aim too. Surely any policy should aim to discourage day trippers and encourage stayovers, thus minimising the use of transport? The proposal for a visitor levy seems to do just the opposite.
The Regulatory Impact Assessment is set out in Part 2 of the Explanatory Memorandum (https://senedd.wales/media/g5ipwvwh/pri-ld16812-em-e.pdf). This includes the Welsh Government’s assessments of the financial and other impacts of the Bill and its implementation.
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Trying to ensure that all accommodation providers have registered will be difficult. Most professional businesses will be aware of the legislation and will register, but some occasional letters may well be ignorant of it.
Any exempt visitors have to be paid for and then claimed back afterwards. Considering that 10% of the population have some sort of disability, it’s quite likely that 10% of levies will be reclaimed too. This has the potential to be a huge drain on the WRA’s resources. However, I note that the costs incurred by the WRA are extracted before sending to the local authorities, so it’s actually going to be a huge drain on the local authority revenue.
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The bill will disproportionally affect smaller businesses. The proposal is a fixed rate for all accommodation providers at all times. I can see how that it is simple for the Welsh government to implement, far less paperwork than a proportional rate. For an expensive hotel in Cardiff, it’s a negligible amount too. However, for a North Wales holiday cottage sleeping 4 and charging £65/night in Winter, it’s a 10% tax, on top of all the other costs. Many businesses, already struggling to reach 182 days, will not be able to withstand this.
The Bill will put businesses close to the English border at an extreme competitive disadvantage with their English neighbours, should the local authority choose to implement it. Combined with the requirement to achieve 182 days and the loss of FHL status, many businesses may become uneconomic.
The preamble to the bill states that the drain on local resources by tourism is restricted to a few (mainly coastal) areas. It's quite likely that local authorities outside these hotspots will see this Bill as an easy extra revenue stream.
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The Welsh government should take heed of the old saying: “if you tax it, you’ll get less of it. If you subsidise it, you’ll get more of it.”
The latest stats show that tourism in Wales is already falling due to the 182 rule, this latest intervention will only accelerate that trend. The Welsh Government also need to understand that tourism businesses are interdependent - the pubs and restaurants depend on accommodation providers, accommodation providers depend on tourist attractions (to ATTRACT the tourists, remember that they have choice about where to go for their holidays) and pubs and restaurants. There’s a huge risk, particularly in rural Wales, that tourism could collapse completely.
The powers to make subordinate legislation are set out in Part 1: Chapter 5 of the Explanatory Memorandum (https://senedd.wales/media/g5ipwvwh/pri-ld16812-em-e.pdf).
The Welsh Government has also set out its statement of policy intent for subordinate legislation (https://business.senedd.wales/documents/s155951/Statement%20of%20Policy%20Intent.pdf).
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The legislation claims to be attempting to be fair. To achieve that, some sort of proportionality is definitely required. As it stands, it disproportionally affects smaller businesses, who also can’t reclaim the VAT element of the levy.
The threshold for supplying quarterly returns is much too low. Most holiday cottages meeting the 182 day requirement will definitely incur more than £1,000 worth of annual levies, resulting in a paperwork intensive quarterly submission and reclaim requirement.
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We’ve been running a successful two cottage holiday business in North Wales close to the English border for 14 years. Our profit margins have been reducing rapidly and this levy may well make our business uneconomic. I imagine that many other small businesses close to the border may find themselves in the same situation. Hopefully, local authorities bordering England will see sense and choose not to implement the levy.