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 Country Land & Business Association (CLA Cymru) | Evidence from Country Land & Business Association (CLA Cymru)
(We would be grateful if you could keep your answer to around 500 words).
CLA fundamentally disagrees with the introduction of a visitor levy. We do not believe that the desired outcome of better funding for local services and infrastructure will be realised, and instead that businesses and visitors alike will be worse-off. The timing of the decision to introduce the tax is hugely concerning for CLA members operating a tourism business in rural Wales. The legislation comes at a time when rural businesses are already feeling the pinch of a cost-of-living crisis, all while still adjusting to the changes to the tax system for self-catered holiday lets.
The cost-of-living crisis has led households to re-assess their spending and it is becoming clear that not having a staycation may be an easy way to reduce it. Not only are fewer households choosing to have an overnight stay, but those undertaking day trips are looking for more free activities; research from Visit Britain shows that 32% of UK adults will “look for more free things to do on their day trips”. A visitor levy, which will increase the cost of a holiday in Wales will act as a deterrent to visitors and will disadvantage Wales as a location compared to the other UK nations.
The intension for visitor accommodation providers to account for each visitor and maintain records or each person staying overnight in order to enforce the tax presents a degree of difficulty. The majority of rural holiday let accommodation are small businesses who have diversified to bring in additional revenue to the farm and utilise redundant buildings that are no longer suitable for modern day farming activities. The proposed model is based on the formal desk of a hotel, where it is clear who or how many visitors are staying. Rural cottage holiday lets are often let to families or groups where there is a varying degree of coming-and-going. This would increase the administrative burden for small holiday accommodation operators, the majority of which are run and managed by one person.
Furthermore, the inclusion of all visitors, regardless of age, is unrealistic. It is not appropriate to charge for children of infant age, as they usually sleep in a cot or their parents’ bed. This age of child would also have very little use or impact for local tourist facilities. Additionally, the inclusion of business visitors and Welsh residents who decide to holiday in Wales, is an unjust policy. Business visitors would very rarely use the tourist facilities and the tax will only ensure businesses either accommodate their employees in lodgings that are located in a non-charging area or will ensure overnight stays are reduced or stopped altogether. Many Welsh residents decide to holiday within Wales, for the same reason that so many across the world decide to visit, for the breathtaking scenery, culture, but for them it is ultimately for the convenience of a shorter car, bus or train journey.
Within our consultation response in 2022, CLA highlighted that even though we did not support the introduction of a visitor levy, if the decision was to move forward with the policy, we did not think that it should be applied at the discretion of local authorities. CLA still believes that Welsh Government needs to ensure that it is consistently applied by local authorities, as not to create market competition.
There needs to be very clear guidance on the setting of the premium in which a local authority can charge above the base rate charges. It has not been widely publicised that the Bill makes these provisions for local authorities and considering Welsh Government has the power in the Bill to cap this amount, but has not yet set one, this is adding to the uncertainty for businesses and visitors.
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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The charge from the visitor levy, is based on the number of people staying overnight, however this is illogical because the accommodation provider is responsible for making the payments to WRA, not the guests. Furthermore, the frequency in which the payments are expected to be made, adds an additional burden for the accommodation provider. Businesses who collect more than £1,000 of the levy, have to submit their payments quarterly, instead of yearly.
CLA members believe that the threshold of £1,000 is too low and will ultimately mean that small businesses will be made to submit quarterly returns.
For example: A two-bedroom rural cottage, accommodating a family or group of four and being able to obtain the full 182 occupied days across the year, would bring in £1,092 (incl VAT) to the visitor levy.
This calculation supports CLA’s argument of how this levy will put addition administrative burdens on businesses, especially small rural accommodation providers. The CLA recommends that this threshold to be increased to £2,000 to ensure that the scope of the levy does not hinder those smaller providers, which may see their business become unviable due to the extra workload.
In the latest Welsh Government report, it was stated that the worst scenario is that over 700 tourism jobs could be lost because of this tax, with a revenue loss of over £40Million. This is not an acceptable risk to take, when tourism contributes such a large portion to the Welsh economy. Furthermore, Welsh Governments figures were based only on a 1.6% drop in visitor numbers. Many who operate within the tourism industry, including CLA members, believe that the expected drop will be greater and that Welsh Government has underestimated the impact this tax will have.
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Over the past few years, accommodation providers have seen an array of changes within legislation that governs the tourism industry. When speaking with our members, they have expressed concerns that their businesses may become unsustainable and that they cannot see themselves continuing to provide accommodation to visitors. Others have expressed that this has led them to stop pursuing new investment in their business due to the uncertainty going forward.
This tax will not only impact those who provide accommodation but those visitor attractions that rely heavily on visitors who decide to stay overnight. The decision to continue with the implementation of the tax led to 100 visitor attractions closing their doors on the 10th December, in protest to the levy. Small tourism businesses are the backbone of Welsh tourism, and they are feeling ignored and see it as another blow after other policies, such as increasing minimum wage, have been introduced.
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In our response to the previous visitor levy consultation of December 2022, the CLA highlighted the impact this tax would have on small businesses, especially rural ones. Besides the administrative burden, there is the additional financial cost that the businesses would have to endure. Additional costs include training for the collection of the levy, submitting tax remits, and upgrading computer systems or whole booking systems to administer the levy.
We can see that our concerns have been highlighted within the rural proofing impact assessment, but seemingly no changes made to mitigate the impacts. The impact that this will have on businesses who are less digitally enabled, either due to the training level of the proprietor or the digital connectivity of the area in which they operate, will disadvantage rural business owners. If a business owner has to invest in new or additional technology to adapt, this will only decrease their profits even more. This is when many are already suffering the hardship of decreased numbers of visitors and a changed business rates system. This policy will only deter those away from the industry, for the difficulties that this policy presents to those rural businesses, outweighs the rewards of owning rural holiday accommodation.
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).
CLA members believe that as Welsh Government have the power in the Bill to cap the amount that a local authority can charge above the base rates of the levy, it should be written within the Bill to ensure clear guidance to local authorities.
Furthermore, by implementing changes or important aspects of the legislation through subordinate legislation creates uncertainty, as it can be done at the whim of the Government of the day
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CLA Cymru does not have any views on this matter.
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CLA Cymru members do not support the levy and therefore do not support the tax authority having a comprehensive list of accommodation providers. If the levy were to be delivered in this way, genuine holiday let businesses will in any case be registered for business rates and therefore information is already available for audit and administrative purposes.
It is disappointing to see that Welsh Government continues to pursue a licensing scheme, in conflict with recommendations from the industry. The information accommodation providers are required to record, including that to ensure safety and legitimate accommodation for visitors, can be obtained through a registration scheme without pursuing a licensing scheme.
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The visitor economy has steadily become the industry which agricultural businesses rely on to subsidise their main farming income. The changing demographic and dynamic of the agricultural sector has been the driver for this diversification. The Welsh Government’s ‘Diversification and resilience of Welsh farming’ research paper showed that the proportion of farmers under the age of 45 in Wales fell from 14% to under 10% between 2010 and 2017. It has been crucial for those remaining in the industry to establish other streams of revenue to allow a steady and reliable income. The introduction of a visitor levy will impact the ability of these businesses to diversify and will discourage investment and commitment by property owners and newcomers to the tourism industry.
The visitor levy will also have a considerable impact on rural businesses who have already invested in their properties to provide visitor accommodation. The additional administrative burden that would be placed on them, would significantly impact their business viability assessment.
We are in a cost-of-living crisis, many households are having to adjust their spending habits and families are looking first at additional spending such as overnight holidays, as the first cut from their yearly budget. For the decision to continue with the introduction of this tax, by raising the cost of a holiday in Wales through the visitor levy, is unhelpful and worrisome for businesses already facing loss of income.
Overnight visitors contribute significantly more to local visitor economies than day visitors, they are more likely to spend money in local shops, pubs and stay in accommodation that requires maintenance staff. In 2019 the Great British Tourist Report (commissioned by Visit England, Visit Scotland and Visit Wales) reports £2 billion was spent during trips which included an overnight stay by GB residents in Wales. A three-year average reported by Welsh Government shows that between 2017-2019 the average day-tripper spend was £42, by contrast the average overnight visitor over the same period spent £184.
Many areas in Wales have struggled with the impact of tourism in recent years, with complaints of overflowing car parks, traffic jams and litter. Welsh Finance Secretary, Mark Drakeford commented that “ this is a way of collecting a very small contribution from every one of us who makes a visit to be reinvested in the conditions that make for that visit to be a success”. However, this unfair policy only targets those who are already contributing and does not target everyone who visits Wales, as the Welsh Finance Secretary suggests. Day trippers contribute very little to the economy but have a large impact on the services and facilities provided by that local authority.
From discussions with local authorities, it is evident that they need to know how much will be deducted from the levy collected by the Wales Revenue Authority (WRA). The information they require to analyse the success of this policy, specific to their area, isn’t evident or even obtainable.
CLA Cymru does not agree that exemptions should be at the discretion of the local authorities, these should be set within a national framework. However, there should be opportunity for local authorities to allow discretionary exemptions in cases not referenced by the national framework.