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 Dunoon hotels ltd | Evidence from Dunoon hotels ltd
(We would be grateful if you could keep your answer to around 500 words).
Tourism tax is generally used across the world to prevent over tourism or to raise money in areas of inelastic demand. The principle behind this tax is flawed on both counts since Wales is not suffering from overtourism and apart from a very few cities in Wales, visitor travel to the country is entirely discretionary and if more expensive than other tourist destinations, Welsh hospitality businesses will lose out to areas where the tax is not imposed. Without exception, the other destinations which impose a tourism tax on its visitors have a lower VAT rate than the UK.
This tax in its current form taxes behaviour that the government should be wanting to encourage ie overnight tourism. We should seek to convert day trippers to overnight visitors since the contribution that day trippers make to the destination is much lower than overnight visitors. This tax will disincentivise the activity that should be encouraged.
This tax asks visitors who contribute to the area (overnight guests) to contribute more rather than asking the fleeting day trippers to contribute to the services that they use. It also lays the burden of tax collection and extra cost to the bottom line, on businesses who already make the biggest contribution in terms of tax through NDR and VAT.
Rather than promoting sustainable tourism this tax is likely to jeopardise the very existence of tourism in Wales as private Welsh businesses will find that they have to effectively absorb the tax since the additional costs to the visitor will make Wales uncompetitive in the discretionary tourism market.
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.
(We would be grateful if you could keep your answer to around 500 words).
In principle the tax is paid by the visitor but in reality Welsh businesses will have to absorb the cost of the tax into the cost of accommodation otherwise risk being uncompetitive. Small to medium businesses who already face spiralling costs will be made to face yet another. There is a huge question as to what will happen if (or when) a guest refuses to pay the tax. Why should the business make up the shortfall.
If the tax has to be imposed then it should be imposed on all businesses and stakeholders who play a part in tourism. The current ANPR system could collect registrations of cars entering the taxable area and then both day trippers visiting attractions and eateries and overnight visitors would pay the tax.
(We would be grateful if you could keep your answer to around 500 words).
Unless the tax is made fairer by being imposed on visitors to Wales who don’t stay overnight as well as overnight guests then accommodation providers who for the most part contribute the most of any businesses in terms of NDR and VAT will lose overnight guests. This tax risks damaging the industry that contributes the most in taxes to the Welsh government.
(We would be grateful if you could keep your answer to around 500 words).
The reality of the tax is that accommodation providers will have to soak up the cost of the tax in the room rates. They will then have to bear the cost of collecting the tax and face penalties if the guest who is being taxed refuses to pay.
The long-term impact of the damage to individual Welsh accommodation businesses is unquantifiable but could be devastating both to the Welsh economy and the local residents who depend on visitors for their livelihoods.
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).
(We would be grateful if you could keep your answer to around 500 words).
In terms of educating potential visitors to Wales about the tax, the fact that it is not a National tax but rather a local tax and not even just local to honeypot destinations will be confusing and frustrating to those considering Wales as a destination. A large-scale, well thought out PR campaign is the only effective way to explain the tax and its benefits to potential visitors. It is categorically not the job of the accommodation provider to justify the tax to visitors. Since not every council will impose the tax the clarity of the message will be lost and potential visitors will just view the tax as a financially negative aspect of the decision making process.
(We would be grateful if you could keep your answer to around 500 words).
The potential benefit and/or risk to the tourism industry is unquantifiable since the number of tourism providers as yet unregistered is unknown. No sensible discussion of the impact of the tax can be had until these figures are known and the registration process has happened.
A tax on cars entering Wales would be a safer, fairer way to impose a tax on all visitors.
(We would be grateful if you could keep your answer to around 500 words).
If the tax must be imposed via accommodation providers then a registration of all providers is essential. Individual councils must examine the cost of investigating accommodation providers who do not register and the cost of imposing the fines. In addition, thought must be given to how accommodation providers who try to impose the tax on guests only to have the guest refuse to pay should indicate this refusal to pay.
(We would be grateful if you could keep your answer to around 500 words).