Proposals for a discretionary visitor levy in Wales
Public consultation analysis: Wales’s proposed visitor levy
Tourism is a key industry in Wales, accounting for 5% of Welsh gross value-added in 2019, 11% of all employment, and 11% of all registered enterprises in the country (as of 2020). Given the importance of its tourism sector, the Welsh Government wants to ensure the country’s offerings to visitors are continually improving while generating benefits for people and the environment.
What is the proposed visitor levy?
According to the Welsh Government, “a visitor levy would be a local tax, charged within a local authority area, and which would fund local authority expenditure.” The Welsh Government proposed to give local authorities the option to apply such a levy to tourists and business travellers paying to stay overnight in their local area.
Such “tourism taxes” have been implemented with success in other parts of the world. The aim is to enable local authorities to raise additional revenue to re-invest in infrastructure and services that improve Wales’s tourism offerings, as well as quality of life for residents.
Is it a good idea?
In order to answer this question, all potential impacts must be considered. To that end, the Welsh Government sought views from the public to inform the design and implementation of the levy. Alma Economics was then commissioned to undertake the analysis of this public consultation.
We analysed over 1,200 responses, from various sources including an online survey, emails, and alternative questionnaires tailored to specific audiences to maximise engagement and accessibility. The respondents included both individuals and organisations, such as local authorities, accommodation providers, and representative bodies.
This analysis builds upon previous work by our team estimating price elasticities relevant to a visitor levy.
Why a consultation?
Public consultation is a key element of democracy and the policymaking process, ensuring that the views, experiences, knowledge, and ideas of the public and professional experts help inform decision-makers when designing and implementing new policies and regulations. The consultation allowed the public and experts to share their views and expertise relating to the visitor levy proposed by the Welsh Government.
Our rigorous and independent analysis of these inputs and insights ensures that they are accessible to decision-makers, and key themes that emerge from the consultation are given the appropriate weight.
What did the public say in favour of the tax?
The respondents raised 2 main points on why a discretionary visitor levy in Wales would be a good idea:
Reinvestment in local economies: Respondents commonly advocated for revenues to be committed to sustaining and enhancing infrastructure and services utilised by visitors, like transportation networks, and destination marketing.
Accounting for adverse impact of tourism: Some respondents believed that the levy could be used to incentivise visitors to choose less often visited areas, thus limiting the strain on local services of areas that receive a disproportionate number of visitors. Furthermore, the levy revenues could finance the maintenance and improvement of local services and infrastructure.
What were the arguments against it?
On the other hand, some respondents were concerned about:
Complexity if only some areas implement the levy, or if rates differ between different areas. Such inconsistencies would make administration and compliance very challenging for tax authorities, local authorities, providers, and visitors alike.
Administrative burden, as local authority discretionary visitor levy powers were believed to significantly increase the administrative and compliance burden for all stakeholders. This could result in local authorities having to hire additional personnel or reassign the current ones to administrative jobs, potentially interfering with other local authority functions.
Adverse competition across local authorities to attract accommodation providers and visitors, as accommodation providers could relocate to areas with a lower administrative burden and financial cost, and visitors choose the most affordable accommodation.
The government’s response to the consultation was published today. Explore the details here.