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 Tara-Jane Sutcliffe | Evidence from Tara-Jane Sutcliffe
(We would be grateful if you could keep your answer to around 500 words).
The Bill presents significant risks to our tourism sector, its economy, and dependent communities – across Wales, and especially in rural areas, like Carmarthenshire, where we are reliant on a mixed and interconnected economy of agriculture and tourism.
1. Economic risks to Carmarthenshire’s tourism sector
Tourism is one of Carmarthenshire’s most significant economic drivers, with 710 VAT-registered tourism-related businesses and 7,000 employee (VAT/PAYE registered) jobs in the sector. In 2023, 3.31 million visitors spent over £683 million in Carmarthenshire, a vital contribution to the county’s economy.
A visitor levy risks making Carmarthenshire – and Wales as a whole – less competitive compared to destinations in the rest of the UK, where currently such a tax does not exist. Similarly, compared with those countries in Europe that do impose a visitor levy, most have lower rates of VAT for tourism and hospitality compared to other economic activity – which is not the case in Wales, making us less competitive. For Carmarthenshire, where tourism sustains thousands of jobs and generates hundreds of millions of pounds annually, a reduction in visitor numbers would be catastrophic.
Many of the 710 tourism-related businesses in Carmarthenshire are small businesses, often supplementing agricultural activity. A visitor levy will require a costly and complex system of collection, auditing, and enforcement, especially for microbusinesses. This red tape could disproportionately harm small accommodation providers, increasing barriers for existing businesses and deterring new entrants to the market.
2. Lack of guarantee and accountability for local reinvestment
While the Bill states that revenue raised will be reinvested in local tourism infrastructure, there is no clear mechanism to ensure this happens in practice. Local authorities, including Carmarthenshire County Council, would have discretionary powers to impose the levy and determine how the funds are spent. Without strict safeguards, there is a risk that, rather than actually improving tourism infrastructure or promoting sustainable tourism, revenue would be used to deliver politicised and ineffective ‘vanity projects’ or diverted to plug budget gaps in unrelated areas.
3. Sustainability in tourism
Carmarthenshire does not face the same attritional ‘over-tourism’ experienced in destinations such as Amsterdam or Barcelona, where visitor levies are used as a tool to reduce footfall. Instead, Carmarthenshire is working to attract more visitors, particularly during the off-peak season, to support its year-round economy. A levy would have the opposite effect, creating a perception that Carmarthenshire – indeed Wales as a whole – is less welcoming than competing destinations. Any policy that risks reducing demand for Welsh tourism products would undermine the sustainability of this critical industry.
4. Impact on Local Jobs
Many rural and coastal communities are heavily reliant on tourism for employment and economic activity. A decline in tourism revenue would not only harm businesses but could also lead to job losses, especially for younger people who will go elsewhere to seek employment.
Sustainable tourism can and should be achieved through collaboration and incentivisation of innovation and investment — not punitive taxation.
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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Several unintended consequences are likely to arise from the implementation of the Bill, and which would have detrimental impact on Carmarthenshire’s tourism sector and economy, and Wales as a whole.
1. Economic decline in Carmarthenshire’s tourism sector
The visitor levy is likely to lead to reduced visitor numbers, lower spending and added pressure on local infrastructure through preference for ‘free’ activities. Welsh Government research shows that 21% of potential visitors may decide not to take overnight trips to Wales as a direct result of the levy. For Carmarthenshire, this could lead to a decline in visitor numbers, particularly among families and budget-conscious travellers from the rest of the UK, who form a significant proportion of the county’s tourism market. Visitors who still come are likely to cut back on spending to offset the additional cost, harming local businesses such as restaurants, shops, and attractions. In addition, a preference for free activities is also likely to put added strain on the local authority for the maintenance of tourism-related infrastructure, running counter to the stated aims of the Bill.
2. Harm to small and microbusinesses
Carmarthenshire is home to 710 VAT-registered tourism-related businesses, many of which are microbusinesses already facing significant challenges. The visitor levy presents an additional administrative burden and risks business closures.
Implementing and collecting the levy would impose additional red tape and costs on these small businesses, many of which lack the time and resources to handle complex administrative requirements. The combination of reduced visitor numbers and increased operational costs could force some small businesses to close, leading to job losses and long-term economic harm to the region.
3. Job losses and reduced employment opportunities
The tourism sector provides 7,000 employee jobs in Carmarthenshire, representing a significant share of the local workforce, especially in rural and coastal areas where other job opportunities are limited. A decline in visitor numbers and spending would inevitably lead to job losses in the tourism and hospitality sectors, particularly in smaller rural and coastal communities heavily reliant on tourism.
4. Damage to Carmarthenshire’s reputation as a tourism destination
Wales as a whole, and Carmarthenshire in particular, has worked hard to establish itself as a welcoming destination that promotes its rich culture, history, and natural beauty. However, a visitor levy is likely to damage this reputation. Visitors may perceive the tax as unwelcoming, especially when competing destinations in England and Scotland do not impose similar levies. This will harm Wales’ image as a cost-effective and family-friendly destination.
5. Disparities between local authorities
The Bill gives local authorities discretionary powers to impose the levy, creating the potential for disparities across Wales. Inconsistent application will lead to competitive disadvantage. If some local authorities introduce the levy while others do not, visitors may simply avoid areas where the tax is applied. This would unfairly disadvantage Carmarthenshire if nearby counties choose not to implement the levy. Carmarthenshire could lose out on visitors to areas of Wales or England that do not impose the tax.
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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 Bill must be considered in the broader context of existing and forthcoming legislation, which, when taken together, could have devastating compound effects on Wales’ tourism and agricultural communities. These overlapping measures risk disproportionately penalising small, rural businesses that are already under significant economic pressure.
1. The combined impact of holiday let regulations, limited business rates relief and the visitor levy
Recent changes to the criteria for holiday let properties to qualify for business rates has already placed significant strain on the tourism sector - with failure to meet new thresholds resulting in the property being reclassified for council tax purposes, often at premium rates applied by local authorities. Additionally, in April 2024 Welsh Government reduced relief on business rates effecting the retail, leisure and hospitality sectors, increasing costs passed on to consumers and thereby making tourism businesses in Wales less competitive than those in England.
For rural communities like those in Carmarthenshire, where tourism and agriculture are often intertwined, the introduction of the visitor levy adds yet another layer of financial burden on holiday let owners and those in the wider hospitality sector, many of whom are small-scale operators.
With increased costs from the visitor levy and stricter holiday let thresholds, many property owners will struggle to maintain profitability, potentially leading to the withdrawal of properties from the tourism market altogether. This could lead to reduced visitor accommodation options in rural areas, further harming local economies reliant on tourism.
Farms and rural tourism businesses play a key role in preserving Welsh culture, language, and heritage. If these businesses fail, in Carmarthenshire and Wales as a whole, we risks losing part of our cultural identity. Many holiday let properties are historic buildings, often repurposed and appropriate for short stay only. If combined pressure from the visitor levy and new holiday let regulations makes these buildings no longer viable as holiday lets, they risk falling into disrepair as they would not otherwise revert to the local housing market.
Holiday let properties support local economies by bringing visitors who spend money in shops, restaurants, and attractions. If fewer properties meet the occupancy criteria or remain available, this will exacerbate the decline in visitor numbers caused by the visitor levy, resulting in further economic harm.
2. The overlapping impact of agricultural policies
Family farms often operate small-scale tourism ventures, such as holiday cottages or camping facilities to diversify their income streams and ensure financial viability. The UK Labour Government’s proposed tax changes on family farms threaten to penalise farmers further by increasing their tax burdens, compounding the financial challenges posed by Welsh Government policies. This will push some farms out of business, threatening the sustainability of rural communities.
3. Lack of holistic impact assessment
There is no indication that the Welsh Government has considered the cumulative impact of its tourism and holiday let regulations alongside UK Labour’s proposed taxation on family farms. The lack of an overarching impact assessment means that policymakers risk underestimating the financial and social toll on Wales’ rural communities.