What assessment has the Welsh Government made of the economic impact of the proposed tourism levy in Wales?
This work is being carried out in collaboration with Cefin Campbell, the designated member, as part of the Co-operation Agreement between the Welsh Government and Plaid Cymru.
The question about the economic impact of a proposed tourism levy is similar to one asked by Darren Millar MS in Plenary on 16 February 2022. The literature suggests the economic impacts following the introduction of a tourism levy have been minimal in other countries, although the evidence base is limited.
Impacts and benefits will be variable depending on the type and design of a levy. The need to generate revenues to support local services will be balanced with the need to maintain competitiveness for the sector. Any levy introduced would be proportionate by design.
Our initial integrated impact assessment will be published alongside the launch of the formal consultation. The assessment will be continually updated as we progress with policy design and gather the results of research. This activity will be informed by extensive engagement with partners.
Any local tourism levy powers, which are introduced will be discretionary, therefore impacts and benefits will be variable across Wales. Funds raised by the levy will be invested back into the local services which make tourism a success in Wales.
The impact of a levy on the number of tourists visiting Wales is likely to vary depending on which local authorities choose to implement a levy. Ultimately, any revenues raised from a levy will benefit the tourism sector by enabling local authorities to maintain and enhance the services and infrastructure which make tourism a success in their local areas.
We will be supporting local authorities by providing them with tools and methodologies to inform their assessments on the potential impacts of the levy in their areas. More generally, the wider impacts will be considered as part of our integrated impact assessment. We will also be commissioning independent research to explore the impact of tourism taxes on tourism demand, including the number of tourist arrivals and tourist expenditure.
A written statement published on 10 February outlined the next steps for the development of a tourism levy in Wales. During February and March, Treasury officials have engaged with the industry through the regional tourism forums. These meetings contain representative businesses and organisations from each geographical area. Officials have also had initial discussions with the Welsh Tourism Alliance and UK Hospitality.
The consultation will launch later this year in the autumn. Officials will continue to engage with the sector to ensure practicalities and impacts are considered in detail to inform the overall consultation design. We are establishing a business reference group to continue these discussions and intend to host a series of consultation events during the consultation window to encourage a wider range of views for consideration.