Senedd Cymru | Welsh Parliament

Bil Llety Ymwelwyr (Cofrestr ac Ardoll) Etc. (Cymru) | Visitor Accommodation (Register and Levy) Etc. (Wales) Bill

1. What are your views on the general principles of the Bill and the need for legislation to deliver the Welsh Government’s stated policy objective, which is to:

§    ensure a more even share of costs to fund local services and infrastructure that benefit visitors between resident populations and visitors;

§    provide local authorities with the ability to generate additional revenue that can be invested back into local services and infrastructure to support tourism;

§    support the Welsh Government’s ambitions for sustainable tourism?

The Visitor Levy Bill, as currently proposed, lacks the strategic vision and careful consideration necessary for its success. It risks disproportionate harm to rural economies, Welsh-speaking communities, and the tourism sector while failing to address critical issues such as depopulation, infrastructure investment, and the cumulative impact of recent policies. These significant flaws make it clear that the levy is not the right solution for Wales at this time.

Tourism is a cornerstone of the Welsh economy, especially in rural areas where it is the second-largest employer, supporting vital supply chains, town centres, and cultural heritage. Decisions made today will have generational consequences, and it is essential that Welsh Government policies reflect the unique challenges and opportunities across the nation, rather than applying urban-centric solutions that disregard rural realities.

We strongly oppose the general principles of the Visitor Levy Bill in its current form. While the aim of generating revenue for local services is understandable, the economic rationale and practical implications of the policy are fundamentally flawed, particularly for rural areas like Mid Wales, where the impacts could be most damaging.

Economic Impact

The Welsh Government projects that the levy could raise £33 million annually, assuming all 22 local authorities adopt the scheme. However, this figure is highly misleading when considered alongside administrative and operational costs. The Welsh Revenue Authority (WRA) is expected to retain 20% of levy revenue for management, while local authorities are estimated to spend 10–20% on administration and enforcement. This means up to 40% of the revenue—approximately £13.2 million—could be consumed before any funds reach local communities.

Worse still, these modest financial gains come at a significant cost to the Welsh economy. The Bill’s accompanying documents acknowledge that the levy may lead to reduced visitor numbers, with estimated declines of 2–10% in overnight stays. For example, overnight tourism in Powys generates £1.2 billion annually. A 10% decline could equate to a loss of £120 million, far exceeding the revenue the levy aims to generate. Across Wales, these losses would be devastating, particularly in rural areas where tourism underpins local economies.

Jobs and Investment

The levy is predicted to result in 730 job losses in the private tourism sector, costing the economy £47.5 million annually. This is partially offset by the anticipated creation of 360 public sector jobs within local authorities, but these roles are expected to cost around £13 million annually (based on an average salary of £28,000 plus pensions and National Insurance contributions). This shift from private-sector to public-sector employment does not create net economic growth; instead, it imposes a long-term burden on taxpayers while further destabilising tourism-dependent communities.

We are already seeing stalled investment and reduced confidence due to the uncertainty surrounding the levy. A key hotel in rural Wales has withdrawn £300,000 of planned investment, citing rising costs and the inability to secure long-term bookings due to the uncertainty of pricing. Similarly, a large caravan park operator has cancelled £450,000 of planned development, while a major internationally recognised attraction has scaled back staffing and paused key projects. These are just a few examples of the significant disruption already being caused, even before the levy has been implemented. It is likely that many other businesses across Wales are facing similar challenges.

Timing and Broader Context

The Bill is being introduced at an incredibly fragile time for the tourism sector. Businesses are still recovering from the economic impacts of the pandemic and are grappling with soaring energy costs, labour shortages, and rising inflation. Adding further uncertainty and administrative burdens through a levy risks pushing already vulnerable businesses to the brink. This is not just about the survival of individual businesses but the stability of entire communities, particularly in rural Wales.

The tourism sector contributes £4.95 billion annually to Wales’ economy and supports 159,000 jobs, representing 11.8% of the workforce. Any policy that risks reducing visitor numbers or deterring investment should be approached with extreme caution. Instead of stabilising the sector, the levy introduces further economic fragility.

Reputational Risks

Wales’ tourism strategy relies on its image as a welcoming, affordable destination. The introduction of a visitor levy risks creating a perception of Wales as overtaxed and unwelcoming, particularly to domestic visitors from England, who form the largest share of overnight stays. International comparisons cited in the Bill, such as Amsterdam or Catalonia, are not appropriate models for Wales’ rural-heavy tourism economy. Unlike urban-centric destinations, Wales relies on small, independent operators, and its visitors are highly price-sensitive.

Lack of Strategic Alignment

Finally, the Bill is being introduced without an updated tourism strategy. The existing strategy does not reflect the post-pandemic realities of the sector, nor does it account for the broader economic pressures businesses face. A robust, forward-looking strategy should have been developed first to ensure the levy aligns with Wales’ long-term tourism goals.

Conclusion

The Visitor Levy Bill’s general principles are fundamentally flawed. It introduces a significant economic and administrative burden while providing minimal net benefit. The risks to jobs, investment, and Wales’ reputation as a tourist destination far outweigh any potential revenue gains. We urge the Welsh Government to reconsider this policy, prioritising stability and sustainability for the tourism sector rather than implementing measures that will cause long-term harm.

2. Are there any potential barriers to the implementation of the Bill’s provisions? If so, what are they, and are they adequately taken into account in the Bill and accompanying Explanatory Memorandum and Regulatory Impact Assessment?

The proposed Visitor Levy Bill contains several substantial barriers to implementation, many of which are not adequately addressed in the Bill or its accompanying documents. These barriers range from administrative and enforcement challenges to economic and legal risks, which collectively undermine the feasibility of the policy.

1. Administrative Complexity

The Bill places the responsibility for collecting and remitting the levy on accommodation providers. For many small and microbusinesses, this introduces a disproportionate administrative burden. Over 90% of tourism operators in Wales are small or family-run businesses with limited resources to manage complex compliance requirements. These businesses often operate with manual systems and minimal staff, making the additional workload of calculating, collecting, and submitting the levy unmanageable.

Local authorities, too, face significant challenges. Although they are tasked with administering and enforcing the levy, the Bill does not provide clarity on the additional funding or staffing required to perform these duties effectively. Based on typical administrative practices, local authorities and the Welsh Revenue Authority (WRA) are likely to require around 20% of the levy revenue for staffing and operational costs, though the exact percentage is unspecified. This will significantly reduce the funds available for reinvestment into local services and tourism projects.

The lack of clear resourcing for enforcement and administration creates a risk that the levy will fail to be applied consistently or fairly, particularly in rural areas where providers are more dispersed and harder to monitor.

2. Statutory Licensing

The absence of a statutory licensing system for accommodation providers is a critical omission. Without a comprehensive register, local authorities will struggle to identify businesses liable for the levy, creating opportunities for avoidance and non-compliance. This undermines the fairness of the levy, penalising legitimate businesses while allowing unregistered operators to evade their obligations.

Although the Bill proposes a visitor accommodation register as part of its framework, there is little detail on its timeline, implementation, or enforcement. Statutory licensing should have been introduced as a prerequisite to ensure accurate data collection and compliance before the levy is rolled out.

3. Economic and Legal Risks

Double Funding Concerns:
Local authorities already receive funding for visitor-related services through mechanisms such as the Revenue Support Grant (RSG) and Non-Domestic Rates (NDR). These funding streams are designed to account for increased service demands caused by tourism. The Bill does not address how the levy will avoid duplicating this funding, raising potential legal and ethical questions around double taxation.

Economic Fragility:
The levy risks deterring overnight stays, with the Welsh Government’s own research predicting reductions of 2–10% in visitor numbers. For example, tourism in Powys generates £1.2 billion annually. A 10% decline could equate to a loss of £120 million in tourism spending in that region alone, far exceeding any potential revenue raised by the levy. The resulting economic losses would be particularly devastating for rural areas, where tourism is often the primary economic driver.

4. Enforcement Challenges

The enforcement of the levy relies on local authorities and the WRA, both of which already face resourcing pressures. Many councils struggle to enforce existing regulations, such as business rates, and the additional responsibility of administering and monitoring the levy will exacerbate these challenges. Without additional funding or staffing, enforcement is likely to be uneven, further exacerbating the disparity between compliant and non-compliant businesses.

Moreover, the Bill does not sufficiently address how non-compliance will be enforced. Rural authorities, in particular, may find it difficult to monitor dispersed accommodation providers effectively, leaving gaps in the system.

5. Premium Levy Rates

The Bill allows local authorities to determine their own premium levy rates. While local autonomy can sometimes be beneficial, in this case, it risks creating a fragmented system that confuses visitors and places unfair burdens on businesses operating across multiple jurisdictions. Visitors could face different rates and rules depending on where they stay and deter them further to visiting Wales as a whole.

This inconsistency also creates reputational risks for Wales, as visitors may perceive the levy as arbitrary or unfair. A centralised framework for rates, exemptions, and enforcement would provide much-needed clarity and equity.

Conclusion

The barriers to implementing the Visitor Levy are significant and inadequately addressed in the Bill. Administrative complexity, the lack of statutory licensing, economic risks, enforcement challenges, and inconsistent application across Wales all contribute to a system that is impractical and likely to fail in its current form.

To address these issues, we recommend:

Introducing statutory licensing for accommodation providers to ensure a robust framework for enforcement.

Establishing a centralised framework for levy rates, exemptions, and usage to prevent inconsistency and ensure fairness.

Conducting a more detailed economic impact assessment to fully understand the risks to Wales’ tourism sector.

Without these measures, the implementation of the levy will harm the tourism industry, discourage investment, and create long-term economic instability, particularly in rural areas.

3. Are any unintended consequences likely to arise from the Bill?

4. What are your views on the Welsh Government’s assessment of the financial and other impacts of the Bill?

The financial implications of the Visitor Levy Bill, as outlined in the Explanatory Memorandum, raise significant concerns about its feasibility and economic justification. While the estimated revenue of £33 million annually is presented as a potential benefit, this figure fails to account for administrative costs, realistic collection outcomes, and broader financial risks to the economy.

1. Administrative Costs Will Reduce Net Revenue

The Explanatory Memorandum does not provide a detailed breakdown of the administrative costs associated with implementing and enforcing the levy. However, based on typical schemes, administrative costs for the Welsh Revenue Authority (WRA) and local authorities could consume 20–40% of revenue, leaving as little as £19.8 million available for reinvestment.

Key areas of concern include:

·         The need for additional staffing and training for both the WRA and local authorities.

·         Systems development and ongoing operational costs, particularly for enforcement in rural areas where accommodation providers are dispersed.

·         Cost to businesses to administer.

This substantially reduced net revenue raises questions about whether the levy will generate enough funds to justify the administrative burden and disruption it will cause.

2. Lack of Ring-Fenced Funding

Guaranteeing that revenue will directly support tourism-related infrastructure and projects is critical to maintaining stakeholder trust and achieving the Bill’s objectives.

There is no guarantee in the Bill that levy proceeds will be ring-fenced for tourism-related projects. This lack of specificity undermines confidence in the policy, particularly among businesses and communities that stand to bear the costs of the levy. Without a clear commitment to hypothecation:

·         Funds may be diverted to general budgets, diluting the intended benefits for the tourism sector.

·         Tourism businesses and operators may feel disincentivised to support or comply with the levy if they see no tangible return on investment for their customers or communities.

3. Over-Optimistic Revenue Projections

The projected revenue of £33 million annually assumes full compliance across all 22 local authorities, but this is highly optimistic for several reasons:

·         Not all authorities are likely to implement the levy, particularly in areas where tourism represents a smaller share of the local economy.

·         Non-compliance by unregistered operators, especially in the ‘casual let’ market, could significantly reduce the revenue base.

·         The projected decline of 2–10% in overnight stays will further erode the levy’s revenue potential, especially in rural areas where visitors are more price-sensitive.

The Explanatory Memorandum does not adequately account for these factors, leading to unrealistic revenue expectations.

4. Disproportionate Financial Impact on Rural Economies

The financial implications of the levy will disproportionately affect rural areas like Powys, Ceredigion, and Gwynedd, where tourism represents a significant proportion of the economy. In these areas:

·         The decline in overnight stays will directly impact local businesses, reducing economic activity and tax contributions.

·         Tourism supports secondary industries, such as local suppliers, hospitality, and retail, which will also suffer from reduced visitor spending.

The Memorandum fails to address how these secondary effects will compound the economic harm caused by the levy, particularly in rural Wales.

5. Insufficient Consideration of Long-Term Economic Stability

The Memorandum does not adequately consider the long-term financial risks associated with destabilising the tourism sector. With private-sector tourism jobs predicted to decline by 730, the shift to public-sector employment in local authorities (360 new roles) represents a significant economic imbalance. Public-sector roles are dependent on ongoing taxpayer funding, while private-sector jobs contribute to economic growth through spending and investment.

Moreover, the policy risks discouraging future tourism investment in Wales, as businesses already report withdrawing or delaying development plans due to uncertainty about the levy. This loss of confidence will have lasting financial implications that are not accounted for in the Memorandum.

Conclusion

The financial implications of the Visitor Levy Bill are poorly assessed and overly optimistic. Key issues include significant administrative costs that will reduce net revenue, a lack of ring-fenced funding for tourism projects, and the erosion of revenue through reduced compliance and visitor numbers. Additionally, the long-term financial risks to rural economies and the tourism sector are understated.

To address these concerns, the Welsh Government must:

1.     Provide a detailed breakdown of administrative costs and clarify the net revenue available for reinvestment.

2.    Guarantee that all levy proceeds are ring-fenced for tourism-related projects.

3.    Reassess the revenue projections to account for compliance challenges and visitor behaviour changes.

4.    Include mitigation strategies for rural areas where the financial risks are greatest.

Without these measures, the financial viability of the levy is undermined, and its potential to cause long-term harm to Wales’ tourism economy is amplified.

5. What are your views on the balance between the information contained on the face of the Bill and what is left to subordinate legislation? Are the powers for Welsh Ministers to make subordinate legislation appropriate?

The balance between the information provided on the face of the Bill and what is left to subordinate legislation in the proposed Visitor Levy Bill raises several concerns. While we understand that flexibility in subordinate legislation is often necessary for administrative details, we feel this Bill leaves too much to subordinate legislation, creating a lack of clarity, and uncertainty for stakeholders.

1. Overreliance on Subordinate Legislation

The Bill delegates significant aspects of the scheme’s implementation to subordinate legislation, including

·         The determination of levy rates by local authorities.

·         Exemptions from the levy.

·         Administrative processes for levy collection and enforcement.

These provisions are fundamental to the levy’s operation and impact, yet they are not detailed on the face of the Bill. This lack of specificity creates uncertainty for stakeholders, including local authorities, accommodation providers, and visitors. Key issues include:

Inconsistent Rates: The Bill allows local authorities to set their own premium rates, creating a fragmented system across Wales. This risks confusing visitors, deterring operators from offering services in certain areas, and undermining the coherence of Wales’ tourism offering.

Enforcement Ambiguity: Details about how enforcement will be handled, particularly for unregistered accommodation providers, are deferred to subordinate legislation, leaving local authorities without clear guidance or resources.

By leaving these critical elements undefined, the Bill risks creating an uneven playing field, particularly for rural areas where enforcement and compliance are more challenging.

2. Lack of Clarity and Transparency

The powers granted to Welsh Ministers under subordinate legislation are broad and inadequately defined. For example:

Ministers can prescribe exemptions, adjust levy collection mechanisms, and amend other aspects of the levy’s application without substantial consultation requirements.

There is no clear framework for how Ministers will assess the economic or social impacts of such changes, particularly in rural areas.

This lack of clarity creates risks of arbitrary or inconsistent decision-making, which could erode trust in the levy and its administration. Clearer parameters for these powers should be included on the face of the Bill to ensure transparency and accountability.

3. Insufficient Stakeholder Engagement

The statement of policy intent highlights the intention to use subordinate legislation to consult stakeholders on specific details. However, leaving so much to subordinate legislation reduces the opportunity for scrutiny by the Senedd and the public. Key concerns include:

Limited mechanisms for ensuring that consultation with local authorities, tourism businesses, and community stakeholders will be robust and inclusive.

The potential for subordinate legislation to introduce significant changes without adequate oversight or stakeholder input, particularly in areas such as levy rates, exemptions, and enforcement procedures.

4. Potential for Inconsistent Application

Allowing local authorities to determine premium levy rates could lead to significant disparities across Wales. Visitors may face different rules and costs depending on their destination, which risks creating confusion and discouraging visits. Similarly, accommodation providers operating across multiple jurisdictions may struggle to navigate inconsistent regulations.

A centralised framework for levy rates, exemptions, and enforcement procedures should be included on the face of the Bill to ensure consistency, fairness, and clarity. While local authorities should retain some flexibility, this must be within defined parameters to prevent fragmentation of the tourism market.

5. Ministerial Powers

While it is reasonable for Welsh Ministers to have powers to address technical details and unforeseen issues, the breadth of the powers in the Bill raises concerns. Specifically:

As proposed ministers can make significant changes to the levy’s operation without returning to the Senedd for approval or further consultation. This could undermine oversight, which could disproportionately affect certain regions of Wales.

There is no clear mechanism for assessing the long-term economic, social, or cultural impacts of decisions made under subordinate legislation.

The powers granted to Ministers should be clearly defined, to ensure that significant changes are subject to Senedd approval and robust consultation with stakeholders.

Recommendations

To address these concerns, the following steps should be taken:

Define Core Provisions on the Face of the Bill: Key elements such as premium levy rates, exemptions, and enforcement mechanisms should be included on the face of the Bill.

Parameters for Ministerial Powers: The Bill should limit the scope of subordinate legislation to technical and administrative details, ensuring that substantive changes require Senedd approval and stakeholder consultation.

Centralise Key Elements of the Levy: A centralised framework for rates and exemptions should be established to avoid fragmentation and ensure fairness across Wales.

Strengthen Oversight and Accountability: Introduce mechanisms for assessing the economic, social, and cultural impacts of subordinate legislation, with mandatory consultation for significant changes.

Conclusion

The balance between the information on the face of the Bill and what is left to subordinate legislation is weighted too heavily toward the latter, creating unnecessary uncertainty and risks for stakeholders. The powers granted to Welsh Ministers are overly broad and lack sufficient safeguards, raising concerns about transparency, accountability, and consistency. To ensure the success of the levy and protect Wales’ rural economies, the Bill must provide clearer guidance, limit the scope of subordinate legislation, and prioritise stakeholder engagement and additional ministerial oversight.

6. Do you have any views on matters related to the quality of the legislation?

The quality of the Visitor Levy Bill is undermined by significant gaps in clarity, consistency, and foresight. While the Bill’s intent to create a revenue stream for local authorities is clear, its structure leaves critical elements undefined, leading to potential implementation issues, economic harm, and a lack of public trust. Below are specific areas where the quality of the legislation falls short:

1. Lack of Defined Frameworks

Key operational elements of the levy, such as rates, exemptions, and enforcement mechanisms, are left to subordinate legislation. This lack of detail compromises the quality of the legislation by:

Creating uncertainty for stakeholders, including local authorities, businesses, and visitors, about how the levy will function in practice.

Weakening legislative scrutiny, as critical decisions will be made through subordinate legislation rather than being debated and defined within the primary legislation.

The Bill would benefit from a more defined framework on its face, specifying maximum levy rates, mandatory exemptions, and clear enforcement processes. Such provisions would enhance transparency and consistency while still allowing for local flexibility within established parameters.

2. Insufficient Clarity on Revenue Use

The legislation does not guarantee that funds raised through the levy will be ring-fenced for tourism-related projects. This lack of hypothecation raises concerns about:

Erosion of trust: Businesses and communities may feel disconnected from the levy if they see no tangible reinvestment in local tourism infrastructure or services.

Misaligned priorities: Without guarantees, revenue may be absorbed into general budgets, undermining the stated intent of supporting tourism and local services.

To address these issues, the Bill should include explicit provisions requiring all levy proceeds to be used for clearly defined purposes, such as destination management, infrastructure improvements, and sustainability initiatives.

3. Overly Broad Ministerial Powers

The powers granted to Welsh Ministers under the Bill are too broad and insufficiently defined, allowing significant changes to the levy’s operation through subordinate legislation. This creates risks of:

Arbitrary decision-making, which could disproportionately affect certain regions or sectors without adequate consultation or oversight.

Lack of accountability, as the scope of ministerial powers is not balanced by robust mechanisms for Senedd scrutiny or stakeholder input.

The Bill would benefit from tighter constraints on ministerial powers, ensuring that substantive changes, such as altering levy rates or exemptions, are subject to democratic debate and approval.

4. Fragmentation Risks

By allowing local authorities to determine levy rates, exemptions, and enforcement practices, the Bill risks creating a fragmented system across Wales. This could:

Confuse visitors, who may face inconsistent rules depending on their destination.

Disadvantage regions with higher levies, as cost-sensitive tourists may choose to avoid these areas.

Create administrative burdens for businesses operating in multiple jurisdictions.

A centralised framework for certain key elements, such as maximum rates and mandatory exemptions, would improve the quality of the legislation and prevent unnecessary fragmentation.

5. Insufficient Impact Mitigation

The legislation does not adequately address the broader economic and social impacts of the levy. For example:

The Bill fails to provide measures to mitigate the predicted decline in visitor numbers (estimated at 2–10%) and associated job losses (730 private-sector jobs).

It does not account for the ripple effects on supply chains, community services, and secondary industries that rely on tourism.

A more robust impact assessment should inform the legislation, ensuring that appropriate safeguards are built in to protect vulnerable sectors and regions.

6. Absence of Statutory Licensing

The Bill lacks a prerequisite statutory licensing system for accommodation providers. Without a comprehensive register, enforcement will be inconsistent, and unregistered operators are likely to evade the levy. Introducing statutory licensing as a foundational element of the legislation would improve its enforceability and ensure a level playing field for all operators.

7. Timing and Context

The timing of the Bill does not reflect the current economic realities facing the tourism sector. With businesses still recovering from the pandemic, labour shortages, and rising costs, introducing a levy now adds unnecessary strain. The quality of the legislation is diminished by its failure to recognise these challenges and propose a phased or delayed implementation plan to allow the sector to stabilise.

Recommendations to Improve Legislative Quality

Add Key Frameworks to the Bill:

Specify maximum levy rates and mandatory exemptions.

Provide a centralised framework for enforcement and administration.

Guarantee Hypothecation of Revenue:

Ensure all funds are ring-fenced for tourism-related projects, with clear reporting requirements.

Refine Ministerial Powers:

Narrow the scope of subordinate legislation and require Senedd approval for substantive changes.

Introduce Statutory Licensing:

Implement a licensing system as a prerequisite to improve enforcement and compliance.

Mitigate Economic Impacts:

Include provisions to offset declines in visitor numbers and job losses, particularly in rural areas.

Phase Implementation:

Delay the introduction of the levy to allow for economic recovery and ensure systems and frameworks are in place.

Conclusion

The quality of the Visitor Levy Bill is compromised by its lack of clarity, overreliance on subordinate legislation, and insufficient consideration of broader economic impacts. These shortcomings risk undermining the Bill’s objectives, creating economic harm, and eroding public trust. By addressing these issues and incorporating the recommendations above, the Welsh Government can significantly improve the quality of the legislation and its prospects for success.

7. On 26 November, the Cabinet Secretary wrote to the Finance Committee with some indicative additional registration and enforcement provisions (https://business.senedd.wales/documents/s155952/Letter%20from%20the%20Cabinet%20Secretary%20for%20Finance%20and%20Welsh%20Language%20Indicative%20Stage%202%20amendments%20that%20.pdf) he intends to bring forward at Stage 2 of the legislative process (https://senedd.wales/NAfW%20Documents/Assembly%20Business%20section%20documents/Guide%20to%20the%20Legislative%20Process/Guide_to_the_Legislative_Process-eng.pdf).

Do you have any views on the indicative additional registration and enforcement provisions the Welsh Government intends to bring forward at Stage 2?

The indicative additional registration and enforcement provisions proposed by the Welsh Government at Stage 2 of the legislative process raise several concerns. While the provisions aim to improve compliance with the Visitor Levy scheme, they risk creating significant administrative, economic, and fairness challenges that could undermine the effectiveness of the policy.

1. Administrative Burden and Enforcement Costs

The proposed registration and enforcement measures will impose significant administrative responsibilities on both accommodation providers and the enforcement bodies (local authorities and the Welsh Revenue Authority). Key concerns include:

Resource Demands:
The enforcement of penalties for non-registration, inaccurate submissions, and late payments will require significant staffing and system capacity. The Welsh Revenue Authority and local authorities must process returns, identify non-compliance, issue fines, and manage appeals. These tasks are resource-intensive and could consume a large portion of the levy revenue, reducing the funds available for reinvestment in tourism.

System Capacity and Processing Delays:
The lack of clarity about how returns will be submitted (e.g., paper, online, or a hybrid model) creates uncertainty about the administrative efficiency of the system. Large volumes of returns submitted simultaneously—especially if all submissions are due on a single date—risk overwhelming the system, leading to delays in processing and enforcement actions.

Cost Implications:
The costs of developing, maintaining, and managing an effective registration and enforcement system are likely to be substantial. These costs must be accounted for in detail to ensure they do not disproportionately reduce the net revenue generated by the levy.

2. Impact on Businesses

The proposed provisions introduce penalties for non-registration, late submission, and inaccuracies in returns. While penalties are necessary to ensure compliance, their implementation raises concerns for businesses:

Unintended Penalisation of Genuine Operators:
Smaller and independent accommodation providers, particularly in rural areas, may struggle to navigate the complexities of the levy system. Errors in submissions or delays due to technical difficulties could result in penalties for operators who are otherwise acting in good faith.

Support and Grace Periods:
The provisions do not address the need for adequate support and a grace period for businesses during the initial implementation phase. Providers should have sufficient time and resources to understand their obligations and resolve any errors without facing immediate penalties.

Disproportionate Impact on Small Businesses:
The enforcement measures, including fines of £300 per unregistered premises and daily penalties of £60 for ongoing non-compliance, may disproportionately affect small and microbusinesses that already operate on thin margins.

3. Questions Around Implementation

The provisions raise several practical questions about how enforcement will function in practice:

Clarity of Submission Process:
Will returns be submitted online, on paper, or via a hybrid system? If online, how will rural providers with limited internet access be accommodated? If paper-based submissions are allowed, how will these be reconciled efficiently with online systems?

Timeliness of Enforcement Actions:
How will the Welsh Revenue Authority and local authorities ensure that penalties are issued accurately and fairly without causing delays that could harm businesses? For example, if a provider disputes a penalty or seeks clarification, will fines be suspended until the issue is resolved?

Complaint and Appeals Mechanisms:
The provisions do not outline a clear complaints or appeals process for businesses that wish to challenge fines or enforcement actions. An independent ombudsman or dedicated appeals body should be introduced to ensure disputes are handled fairly and transparently.

4. System and Resource Resilience

The success of the registration and enforcement provisions depends heavily on the resilience of the systems and resources supporting them. Key considerations include:

Scalability:
Can the systems accommodate large volumes of simultaneous submissions without errors or delays? For example, if all businesses are required to submit returns by a set date, how will the system handle this peak workload?

Training and Expertise:
Both the Welsh Revenue Authority and local authorities will need adequately trained staff to manage the complexities of registration, enforcement, and dispute resolution. The lack of capacity in these areas could lead to delays, errors, and mistrust among stakeholders.

5. Transparency and Accountability

The proposed provisions leave many operational details undefined, raising concerns about transparency and accountability:

Allocation of Revenue for Enforcement:
It is unclear how much of the levy revenue will be allocated to cover enforcement costs. Without transparency in this area, stakeholders may question whether the levy is being used effectively to support its intended purpose.

Metrics for Success:
The provisions do not specify how the success of the registration and enforcement measures will be evaluated. Clear metrics, such as compliance rates and administrative efficiency, should be established to ensure accountability.

Recommendations

To address these challenges, the following steps should be taken:

Provide Comprehensive Guidance to Businesses:

Develop user-friendly educational materials, online tutorials, and dedicated support lines to help providers navigate the registration and levy submission process.

Introduce a grace period during the initial implementation phase to allow businesses to familiarise themselves with the system without facing immediate penalties.

Streamline Submission and Enforcement Processes:

Ensure the submission system is robust, user-friendly, and accessible to all providers, including those in rural areas with limited internet access.

Implement contingency plans to manage system overloads during peak periods.

Introduce Fair and Transparent Dispute Resolution Mechanisms:

Establish an independent ombudsman or appeals body to handle disputes related to penalties or enforcement actions.

Clearly define the complaints and appeals process within the legislation or subordinate regulations.

Clarify Cost Allocation and Long-Term Sustainability:

Provide a detailed breakdown of the expected costs of registration and enforcement and their impact on net levy revenue.

Ensure that enforcement costs do not disproportionately reduce the funds available for reinvestment in tourism.

Monitor and Review Enforcement Measures:

Include a formal review process to assess the effectiveness of the registration and enforcement provisions after the first year of implementation.

Use feedback from businesses and local authorities to refine the system and address any inefficiencies.

Conclusion

While the indicative additional registration and enforcement provisions aim to strengthen the Visitor Levy scheme, they risk imposing significant burdens on businesses, local authorities, and the Welsh Revenue Authority. Without careful planning and stakeholder engagement, these measures could undermine compliance, erode trust, and reduce the net benefits of the levy.

To ensure the provisions are fair, efficient, and effective, the Welsh Government must address the operational, financial, and practical challenges outlined above. By providing clarity, transparency, and robust support mechanisms, the legislation can better achieve its intended objectives.

8. Are there any other issues that you would like to raise about the Bill, the accompanying Explanatory Memorandum and Regulatory Impact Assessment, or any related matters?

The Visitor Levy Bill raises significant concerns about its design, timing, and potential for unintended consequences. These issues are exacerbated by the absence of a comprehensive tourism strategy for Wales, a lack of data-driven decision-making, and insufficient attention to the economic, cultural, and generational impacts on rural and Welsh-speaking communities. Without addressing these flaws, the Bill risks causing disproportionate harm to the very sectors and regions it seeks to support.

1. Lack of a Current Tourism Strategy

Wales currently operates without a tourism strategy extending to 2027, leaving this levy disconnected from any long-term plan:

·         Strategic Alignment: The levy is being introduced in isolation, without a cohesive framework for its role within Wales’ broader tourism objectives. This piecemeal approach undermines the sector’s ability to recover and grow sustainably.

·         Prioritisation and Impact Assessment: A robust tourism strategy would identify areas for investment, establish measurable goals for growth and sustainability, and ensure policies align with the sector’s needs.

·         Consistency Across Policies: Recent tourism policies, such as the 182-day rule, have already caused significant harm due to poor design and implementation. Without a guiding strategy, the levy risks compounding these issues rather than addressing them.

Recommendation:
The Welsh Government must prioritise the development and publication of a comprehensive tourism strategy. This framework should include:

·         A clear vision for sustainable growth.

·         Measurable goals for economic and cultural impacts.

·         Specific actions to support rural and Welsh-speaking communities.

2. Depopulation in Gwynedd and Ceredigion

Depopulation in rural areas is a significant challenge for Gwynedd and Ceredigion, where tourism plays a critical role in sustaining local economies and communities:

·         Population Decline: Gwynedd’s population fell by 4.1% (2011–2021), and Ceredigion’s dropped by 5.8% over the same period. These trends threaten the viability of Welsh-speaking communities and exacerbate economic decline.

·         Tourism as a Lifeline: Tourism provides vital jobs and income in these areas. Reductions in visitor numbers due to the levy, combined with increased financial pressures on businesses, will accelerate depopulation as families leave in search of economic opportunities.

Recommendation:
The Welsh Government must conduct a detailed assessment of the levy’s impact on depopulation trends and rural communities, focusing on how these changes affect Welsh-speaking areas.

3. Failures of the 182-Day Rule

The 182-day rule for second homes has caused unintended harm to genuine tourism businesses, particularly farm diversification projects:

·         Misclassification: Many purpose-built tourism accommodations, such as farm diversification units, are unfairly treated as second homes despite being commercial ventures that do not reduce housing stock.

·         Discriminatory Restrictions: No other sector is required to meet trade thresholds to be classified as a business. Seasonal businesses operating in rural and tourism-dependent areas often cannot meet the 182-day threshold, leaving them at a disadvantage.

·         Farming Community Impacts: Tourism businesses provide essential supplementary income for farming families, which form the backbone of rural and Welsh-speaking communities. The rule has forced many to consider closure, with significant cultural and economic repercussions.

Recommendation:
Before introducing the Visitor Levy, the Welsh Government must implement a statutory licensing scheme to:

·         Accurately classify tourism businesses.

·         Ensure fair treatment of operators.

·         Provide reliable data to assess the cumulative impact of policies on the sector.

4. Economic and Cultural Risks to Rural Wales

Tourism is the second-largest employer in Mid Wales, supporting thousands of jobs directly and indirectly through supply chains and local economies. The Visitor Levy threatens to destabilise this vital industry:

·         Rural Economies: Job losses and reduced visitor spending will have a cascading effect on local businesses, town centres, and supply chains, weakening already fragile economies.

·         Generational Impacts: Decisions made now will have long-term consequences. If tourism businesses close and depopulation accelerates, rebuilding these communities will become increasingly difficult.

·         Infrastructure Closures: Recent decisions, such as the closure of three major visitor centres by Natural Resources Wales (NRW), further highlight the lack of investment in rural tourism infrastructure.

Recommendation:
The Welsh Government must shift its focus toward supporting rural economies through strategic investment and innovative policies rather than punitive measures like the Visitor Levy.

5. A Voluntary Levy as a Better Alternative

A voluntary contribution scheme offers a realistic, inclusive, and practical solution that aligns with Wales’ values and supports the communities most dependent on tourism. Unlike a mandatory levy, a voluntary approach avoids punitive enforcement while generating goodwill and broader participation.

·         Broader Participation and Fairness:
A voluntary scheme could include contributions from both day visitors and overnight guests, addressing a significant gap in the current Bill. Many councils advocating for a visitor levy cite the strain day visitors place on local services, yet the Bill focuses solely on overnight stays. A voluntary scheme ensures that all visitors can contribute proportionally, creating a fairer system.

·         Better Messaging and Community Engagement:
By framing the scheme as an opportunity for visitors to “support the communities they love,” Wales can strengthen the relationship between visitors and locals. Positive messaging builds goodwill rather than resentment, avoiding the divisive narratives that can arise from mandatory enforcement. A voluntary contribution reinforces the idea that tourism is a force for good, fostering mutual respect and collaboration between visitors, businesses, and communities.

·         Cost-Effectiveness and Simplicity:
A voluntary scheme eliminates the need for costly enforcement systems and administrative overheads. Local authorities can focus on delivering projects that directly benefit their communities rather than managing compliance and penalties.

·         A Trial to Test Feasibility:
Starting with a voluntary scheme allows the Welsh Government to:

o    Gauge Public Reception: Assess how well visitors and locals respond to the initiative.

o    Demonstrate Results: Showcase projects funded by visitor contributions, strengthening the case for sustainable tourism initiatives.

o    Refine the Approach: Adapt the scheme based on feedback and results, ensuring it meets the unique needs of rural and urban regions alike.

This approach aligns with Wales’ unique strengths and identity. Visitors should feel inspired to “do good things” because they want to—not because they are forced to. A voluntary scheme promotes cooperation and pride while avoiding the negative press and economic risks associated with a mandatory levy.

Conclusion

The Visitor Levy Bill, as currently proposed, lacks the strategic vision and careful consideration necessary for its success. It risks disproportionate harm to rural economies, Welsh-speaking communities, and the tourism sector as a whole while failing to address critical issues like depopulation, investment in infrastructure, and the cumulative impact of recent policies. These flaws make it clear that the levy is not the right solution for Wales at this time.

Tourism is a cornerstone of the Welsh economy, particularly in rural areas where it is the second-largest employer and supports vital supply chains, town centres, and cultural heritage. Decisions made now will have generational consequences, and the Welsh Government must ensure its policies reflect the unique challenges and opportunities facing Wales, not just urban-centric solutions that ignore rural realities.

A voluntary contribution scheme paired with a comprehensive tourism strategy and a statutory licensing system would offer a far better way forward. This approach is fairer, more sustainable, and less divisive, fostering goodwill among visitors and locals while directly addressing the needs of communities. It would also demonstrate a commitment to innovation and collaboration, ensuring that Wales remains a vibrant, welcoming destination for generations to come.

The Welsh Government must rethink its approach to the Visitor Levy, focusing on policies that build unity, foster growth, and protect the identity and integrity of Wales as a destination and a nation.