Under-18s to be exempt from Welsh tourist tax

The bill provides local authorities with a discretionary power to charge a visitor levy on overnight stays in visitor accommodation.

Mark Drakeford, Cabinet Secretary for Finance and Welsh Language, said the bill would give local authorities the power to introduce a visitor levy if they choose.

Drakeford said visitor levies were common worldwide and that if each of Wales’s 22 councils adopted the levy, up to £33 million could be raised each year. Councils wishing to introduce the levy would first have to consult and provide transparency on how the funds raised would be used.

The minister said that a major concern raised during earlier scrutiny of the bill concerned the impact of the levy on children and young people. In response to this, the government has proposed exempting under-18s in lower-rated accommodation, while increasing the levy paid by everyone else from 75p to 80p per night (for campsites and hostels) and from £1.25 to £1.30 per night for other accommodation types.

Drakeford also confirmed that the government will amend the bill during its next stage of scrutiny to refine regulation-making powers. He also addressed the discretion given to principal councils, concluding that additional levies “should be delayed” until the base levy has been established.

Drakeford rejected calls from opposition members to introduce additional changes, arguing they would complicate administration and reduce revenues.

Peredur Owen Griffiths (Plaid Cymru), Chair of the Finance Committee, said that while three-quarters of the committee supported the bill, there were concerns about its effect on the tourism sector. The committee has called for a government review of the levy’s impact within four years and greater clarity on its registration requirements. Griffiths was also concerned about the administrative burdens for small businesses and said the government should be ‘proactive’ in making accommodation providers aware of the support and the guidance available to them.

Griffiths said that some witnesses have told the committee of their concerns about the complexity of adding a premium to the base levy. He welcomed the government’s commitment to consider a stronger framework for this element of the bill and welcomed the government’s commitment to share its analysis of the impact of exempting children from the levy.

Griffiths also welcomed the government’s willingness to introduce visitor levy forums similar to those planned in Scotland, saying they would be ‘beneficial’.

Mike Hedges (Lab), Chair of the Legislation, Justice, and Constitution Committee, said the levy would help “battle the issues that come with overtourism” and ensure visitors contribute to the local economy.  However, Janet Finch-Saunders (Con), suggested the tax would only increase the burden on businesses without benefiting a ‘fragile’ tourism sector.

Sam Rowlands, the Welsh Conservative Economy spokesperson, said the tourism sector should not be further taxed. He suggested the levy could cause tourism levels to fall, arguing “There is a basic principle truth of taxation, which is, whatever you tax, you get less of”.

Rowlands said that Welsh Conservatives oppose the tourism tax because “we believe that the Welsh tourism sector needs encouragement and support”.

Luke Fletcher, Plaid Cymru finance spokesperson, stressed the importance of listening to the industry and local communities when consulting on the levy. He said it must be implemented carefully to avoid ‘unintended’ consequences.

Fletcher would like to see the bill amended so that people using emergency and temporary accommodation can be exempted from the tax on arrival rather than being required to apply for a refund.

Sian Gwenllian (Plaid Cymru) supported the bill, stressing the importance of sustainable tourism. She called on the government to consider a backstop to give clarity on the legal powers available to the Welsh Revenue Authority (WRA) for dealing with allegations that an accommodation provider has not registered.

Gareth Davies (Con) described the levy as a “toxic tourism tax” symbolic of a ‘complacent’ and ‘radical’. He claimed the money raised would be ‘miniscule’ and said ministers should be tackling wasteful government spending instead.

Senedd members agreed to the bill at Stage 1 by 40 votes to 15, with one abstention. Scrutiny of the bill will continue next month, as the Senedd committee considers the bill at Stage 2.

You can read the full debate here.