Should tourists pay a tax contribution towards maintaining the areas they visit? That is the question the Welsh Government will be consulting on this Senedd term, as ministers seek to generate funds for the nation's tourist hotspots.

The government wants to pass a new law that would give each of Wales' 22 councils powers to levy a tourist tax on visitors. The proposals are in the very early stages, but the government's argument for a tourist tax is that it will help sustain services for visitors and locals alike.

"A tourism tax would help to protect the excellent services we already provide and enhance our offer for future generations," a government spokeswoman told The National. "It would give local authorities the opportunity to use visitor contributions to invest in goods and services such as keeping tourists safe, more green spaces and better road infrastructure."

A tax is necessary, the government says, because other ways of taxing tourism – such as Air Passenger Duty, visa fees or VAT rates – are not devolved.

Currently, it is residents and traders in tourist hotspots who "bear the brunt" of council budget constraints on managing visitor services like public toilets, car parks and rubbish collection, according to Mid and West Wales MS Joyce Watson, who said it was "only fair" tourists "pay just a little extra" to cover the costs of those services.

 A tourist tax would be a UK first – the idea has been proposed in Bath, Liverpool and Birmingham, and Edinburgh made progress with its plans before coronavirus put them "on hold".

Edinburgh Council leader Adam McVey told The National the proposed tourist tax had been well-received during consultation – 85 per cent of residents and 51 per cent of accommodation providers said they would back a modest, fixed-rate tax – and would be a crucial source of income.

"Our economic strength has brought us a great deal of success as a city but the reality is, without an additional income stream, we will struggle to manage and support this success in future," he said. "Tourism and hospitality are key drivers of our economy and this levy provides us with a way to sustainably support its continued success and reduce impacts on residents all year round.”  

The National Wales: A flat-rate tourist tax in Edinburgh could generate between £11.6m and £14.6m annually, the city council believes. Picture: Jane Barlow/PA WireA flat-rate tourist tax in Edinburgh could generate between £11.6m and £14.6m annually, the city council believes. Picture: Jane Barlow/PA Wire

But support for tourist taxes are far from universal, in Wales and elsewhere. Leading the opposition to the plans here are the Welsh Conservatives, who claim they would make Wales more expensive, and therefore less competitive as a tourist destination.

"A tax on tourists could hammer small firms, discourage people from visiting Wales and make the average family holiday much more expensive – leading to visitors seeking holidays elsewhere," said the party's shadow tourism minister Tom Giffard. "The impact on the industry in Wales, on jobs, small hotels and B&Bs would be shocking."

Giffard said such plans were "widely opposed" by industry professionals, and that "fairer funding" and more powers for local authorities in Wales would better address the tourism-related burdens on councils that had been highlighted by Watson and the government.

Andrew Campbell, chairman of the Wales Tourism Alliance, said members had said "no way" to the idea of a tourist tax, which he said were incompatible with the high rates of VAT in the UK when compared with other tourist destinations in the Eurozone. A tax would also affect supply chains and disproportionately impact low-income people who wanted to visit Wales, he added.

"Charging visitors more is not the solution to any problems associated with visitor management," Campbell said. "A more sustainable approach is required, based upon better planning and greater dialogue with local communities.”

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But how have taxes been received elsewhere? At least 20 countries in continental Europe have some kind of tourism tax, including bed taxes that may be incorporated into things like accommodation prices. Some nations may only levy taxes in certain cities or regions.

According to a 2020 survey by Copenhagen-based thinktank Group NAO, which asked European cities' tourism promotion agencies about their impacts of tourist taxes, two-thirds disagreed that taxes had had a negative impact on visitor numbers, while three-quarters said visitors were indifferent and accepting when it comes to tourist taxes.

And in Japan, a so-called 'Sayonara' departure tax was introduced in early 2019, charging each tourist around £6 when they left the country. Figures show the tax failed to dent Japan's tourist numbers that year – a record 31.9 million people visited from overseas.

The UK's Local Government Association poses a crucial question to those who support a tourist tax. Can areas offer a unique experience to visitors? A holiday-maker wanting a week on the beach can choose from multiple locations, and may be swayed by the existence of a tourist tax in some destinations; but a tourist wanting to do something specific – such as visiting the Eiffel Tower, – would be much less likely to be put off paying a tourist tax in Paris.

The National Wales: Beach-goers in Barry Island. Picture: Ben Birchall/PA WireBeach-goers in Barry Island. Picture: Ben Birchall/PA Wire

These arguments for and against a tourist tax are magnified by the impacts of Covid-19. Before the pandemic, tourism was a lucrative source of income for the Welsh economy. Domestic visitors made a total of 10.6 million overnight stays to Wales in 2019, generating £2 billion; while there were also more than one million international visitors, who spent £515 million here.

Despite the sector reopening earlier this spring, coronavirus continues to constrain Welsh tourism. International visitors to the UK are still subject to the traffic-light system of travel restrictions, while for domestic tourism, Welsh Government research found recent mixed performance was down to capacity restrictions, rather than an overall lack of demand.

While the worst of the pandemic pressures should – hopefully – be over by the time the government has finished consulting on the tourist tax plans, the current vulnerabilities of the sector will play a role in shaping people's attitudes. Will the cases for and against a tourist tax be made stronger, or weaker, as a result?

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