A ‘tourism tax’ Bill - that will give local authorities the option to introduce a small visitor levy in their area - has been introduced by the Welsh Government’s Finance Secretary Mark Drakeford.
The Visitor Accommodation Bill proposes that people staying overnight in Wales will pay a small charge. The money raised will support local tourism activity and infrastructure.
If all Welsh local authorities choose to introduce a visitor levy, it is estimated it could generate up to £33m a year.
The levy would be set at:
• 75p per person per night for people staying in hostels and on campsite pitches.
• £1.25 per person per night for those staying in all other accommodation types.
The legislation also includes a requirement to establish and maintain a register of visitor accommodation in Wales, which would – for the first time – provide a register of the broad range of visitor accommodation available across the country.
Local authorities such as Pembrokeshire Council, will decide if they want to introduce a levy in their area, based on what is best for their communities. It is estimated the earliest this could happen is 2027 after a local authority has consulted their community.
Visitor levies are used successfully in many parts of the world, including Manchester, Greece, Germany, Spain and California.
Mark Drakeford remarked: “This Bill is rooted in the principle of fairness. We know tourism makes an important contribution to the Welsh economy and to Welsh life. We want to ensure its long-term sustainability.
“That’s why we believe it is fair visitors contribute towards local facilities, helping to fund infrastructure and services integral to their experience. Visitor levies are common around the world, benefiting local communities, tourists and businesses – and we want the same for Wales.
“It’s a small contribution that could make a big difference.”
A statutory registration scheme for all accommodation providers is expected to start operating in 2026 to support the collection and administration of a visitor levy. It will include details about who is operating in the sector.
The Visitor Accommodation Bill proposes that people staying overnight in Wales will pay a small charge. The money raised will support local tourism activity and infrastructure.
If all Welsh local authorities choose to introduce a visitor levy, it is estimated it could generate up to £33m a year.
The levy would be set at:
• 75p per person per night for people staying in hostels and on campsite pitches.
• £1.25 per person per night for those staying in all other accommodation types.
The legislation also includes a requirement to establish and maintain a register of visitor accommodation in Wales, which would – for the first time – provide a register of the broad range of visitor accommodation available across the country.
Local authorities such as Pembrokeshire Council, will decide if they want to introduce a levy in their area, based on what is best for their communities. It is estimated the earliest this could happen is 2027 after a local authority has consulted their community.
Visitor levies are used successfully in many parts of the world, including Manchester, Greece, Germany, Spain and California.
Mark Drakeford remarked: “This Bill is rooted in the principle of fairness. We know tourism makes an important contribution to the Welsh economy and to Welsh life. We want to ensure its long-term sustainability.
“That’s why we believe it is fair visitors contribute towards local facilities, helping to fund infrastructure and services integral to their experience. Visitor levies are common around the world, benefiting local communities, tourists and businesses – and we want the same for Wales.
“It’s a small contribution that could make a big difference.”
A statutory registration scheme for all accommodation providers is expected to start operating in 2026 to support the collection and administration of a visitor levy. It will include details about who is operating in the sector.
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NewsTranscript
00:00and Levy etc Wales Bill was laid in the Senedd, the Bill provides a permissive power to local
00:08authorities to decide whether or not they want to introduce a visitor levy in their
00:13local areas based on their local circumstances.
00:18Doing so fulfils a commitment in Welsh Labour's manifesto, repeated in the programme for government
00:24and the Co-operation Agreement. The power is to be drawn down by participating councils
00:31where they wish to be enabled to raise a modest levy on visitors staying overnight in visitor
00:38accommodation.
00:40The levy is rooted in the principle of fairness in participating local authorities. The costs
00:46of maintaining the public infrastructure and services that make Wales an attractive destination
00:52will be shared by all those who use them and who benefit from them. The considerable
00:59bulk of these costs will continue to be borne by local residents, but visitors will now
01:06also make a small but fair contribution to the development and preservation of the characteristics
01:13which drew them to those areas as visitors in the first place.
01:18In doing so, there will be a collective effort to secure the long-term sustainability of
01:24the tourism sector and its significance to the Welsh economy.
01:29Y Dirprwy Lywydd, mae'r Bill wedi'i ysgrifennu.
01:32Llyr Gruffydd AM, Cymru Member
01:33This Bill has taken a great deal of time to come into existence. The idea of the visitor
01:39level was proposed for the first time in 2017, during a public call for new tax ideas.
01:49Since then, the idea has been refined and developed through extensive consultation and
01:55collaboration, including with the tourism sector. We have addressed their concerns as
02:02we have developed and refined this policy, incorporating feedback to design a straightforward
02:10and fair levy.
02:13To put it with visitor levies, tourism taxes are commonplace all over the world. Many Members
02:23of the Senedd here today will have paid a levy abroad, probably without noticing, perhaps.
02:33Governments worldwide recognise that visitor levies are an effective means to offset some
02:43of the costs associated with tourism.
02:48The research that was published alongside the Bill shows that revenues from visitor
02:53levies can greatly enhance tourist destinations by funding infrastructure improvements and
03:00protecting the environment.
03:05Nor is the use of visitor levies confined to other parts of the world.
03:12Manchester has already introduced its own city centre charge. Early this year, Scotland
03:22passed legislation to enable its local authorities to consider a levy.
03:31I know that Edinburgh has planned to use those new powers, and other parts of the UK are
03:43also considering visitor levies. Our proposals here in Wales are rowing with the tide, not
03:52against it.
03:53There have been constraints on Council budgets over the last 14 years, which have placed
03:58such pressures on discretionary budgets in particular. A visitor levy would provide
04:05those participating local authorities with an important new revenue stream to support
04:10tourism-related costs. If all 22 local authorities were to introduce the levy, it could potentially
04:18raise up to £33 million each year.
04:23Communities interested in this power will be required to consult residents and businesses
04:28before making a decision to introduce a levy. Monies collected will have to be held in a
04:35separate visitor levy account. An annual report will have to be produced to demonstrate to
04:42their communities how funds raised from the levy have been applied in their areas.
04:49Ensuring transparency in this way will be crucial in reaffirming the benefit a visitor
04:55levy can bring in the long term.
04:59Consumer research published alongside the consultation among Welsh residents and UK
05:04holidaymakers has shown broad support for a visitor levy. Most respondents agreed that
05:11tourists should help cover the costs of maintaining and investing in destinations, especially
05:18in high-tourism areas. Many people who responded to our public consultation suggested a per-person
05:26per-night charge was the best approach for businesses, and we have followed that advice.
05:33However, to ensure fairness, we are proposing to set two different visitor levy rates, with
05:39a lower rate applied to stays at hostels and camping site pitches. The visitor levy rate
05:46is set in the Bill at £0.75 per person per night for people staying in hostels and on
05:52campsite pitches, and £1.25 per night for stays in all other types of visitor accommodation.
06:02We have kept the rate low in comparison to many levies overseas, and we have limited
06:08exceptions and reliefs in order to reduce complexity. As a new levy, we want consistency
06:16in approach across local authority areas, and that is why we have set the initial rates
06:22on the face of the Bill.
06:25Dirprwy Lywydd, despite all the work already undertaken to bring this Bill before the Senedd,
06:30we estimate that 2027 will be the earliest a visitor levy could be introduced anywhere
06:39in Wales. In the coming period, we will continue to work with businesses, local authorities
06:44and the Welsh Revenue Authority to ensure that the visitor levy is a success. Developing
06:50guidance collaboratively will be an initial step in this process, and that was discussed
06:56at this morning's meeting of the Visitor Economy Forum, which I was very pleased to attend.
07:03Finally, as we develop this Bill, through the process of consultation and continued
07:10engagement, and based on the work led by the Welsh Revenue Authority, we received consistent
07:17feedback that we needed to have registration in place to support the levy. That advice
07:24has informed our decision to include a national register of all those providing visitor accommodation
07:30in Wales as part of this Bill. The register will provide valuable data to inform future
07:36tourism development and assist in the efficient collection of the levy where implemented.
07:42It will form the basis of the statutory licensing scheme to which this Government remains committed.
07:49We have also developed some additional registration enforcement provisions, which I intend to
07:54share with committees today to support stage 1 scrutiny.
08:00Llywydd, as we continue to promote our country as a world-class destination for visitors
08:06and the benefits that that brings, we must also take collective responsibility for managing
08:11the impact that tourism has on our environment and local communities. I hope Senate Members
08:19will allow the Bill to proceed to stage 1 scrutiny as an investment in Wales's future
08:26to help us create a sustainable and prosperous tourism industry and to support those communities
08:32which rely upon it.
08:36Peter Fox AM. Diolch, Llywydd, and thank you, Cabinet Secretary, for this statement.
08:42Llywydd, I will make it clear from the outset that I and my group are opposed to this Labour-applied
08:49tax hike on our tourism sector. As we all know, one in seven jobs in Wales relies on
08:56the tourism industry, which equates to almost 200,000 people. Clearly, this is an industry
09:01that must be supported, not exploited. The Welsh Government states that a visitor levy
09:07would follow the Welsh Government's tax principles, one of which is to deliver Welsh Government
09:13policy objectives, in particular supporting jobs and growth. But Labour's policy for supporting
09:19the economy by levying new taxes simply doesn't make sense. The Government's own impact assessment
09:25highlights the fact that, in the worst-case scenario, there could be as much as a £60
09:31million impact on the industry and a resulting of possibly hundreds of losses of hundreds
09:37of jobs.
09:38Now, we know businesses in the hospitality sector already have huge challenges, having
09:43to pay double the business rates that their counterparts in England do. They shouldn't
09:49be further disadvantaged by things like this. Now, the legislation will create another significant
09:55pressure on an incredibly hard-pressed sector, and I know this tax wouldn't arrive until
10:01early 2027, but it is seen as another drag anchor around the industry's neck. The tourism
10:07sector is still trying to build back from the pandemic, and, to make matters worse,
10:12they are faced with UK Labour hiking up their costs through the increase to employers' national
10:17insurance and its reduced threshold. If councils introduce this to the industry, it will bring
10:25the additional bureaucracy and administering of the tax, and that's another hidden cost
10:30and burden to those businesses.
10:32And let's just look at the cost for the Welsh visitor. We talk about it being minimal, but
10:37£1.25 a night. So, a family with four children staying in a guesthouse would have to budget
10:41for around another £52.50. If that business is VAT registered, it will have to charge
10:47the VAT on top, and that will take it over £60 for a seven-day break. I would suggest
10:53that that could stop visitors deciding to holiday in Wales. Also, we see councils can
10:59lift the chargeócouncils can lift the charge to new proposed levels with Government permission.
11:07So, the cost to visitors in some parts of Wales could be greater. And, as you know,
11:13First Secretary, Welsh councils are facing £560 million-worth of pressuresówe heard
11:19from leaders earlier todayódue to mainly the inadequate past settlements. Now, I'm
11:25concerned there is a real risk that the tax will end up helping other struggling services
11:29and diverting money away from its intended purpose. There have to be real safeguards
11:36put in placeóand I know you've outlined some of thoseóto make sure that tourism uplifts
11:42aren't top-sliced from existing budgets for economic development, for instance. The
11:50Welsh Government cites examples of tourism levy across the world, but several of these
11:55have been implemented to deter tourists. You quoted Edinburgh, and I believe Edinburgh
12:00is considering bringing one in to deter tourists. So, with this in mind, what assessment has
12:05been made of the impact this proposed tax will have on the number of overnight tourists
12:10coming to visit Wales? And, yes, other countries use visitor levies as a way of raising revenue,
12:16and for that money to be exclusively used to improve facilities for tourism use, and
12:22there is some merit in that argument. However, comparing other countries with ours could
12:26be like comparing apples with pears. Other countries have different taxation regimes
12:32for their citizens. They may not have the equivalent of our council tax, for instance,
12:37which already makes provision for economic development, and such ought to be considering
12:42tourism. In Wales, it could be argued that this levy would be a level in double taxation
12:48on hard-pressed families for something that already should have been provided for. I note
12:55that the legislation will compel the publication of reports on how much revenue has been collected
13:03and where it should be spent, and I do welcome this, at least. Cabinet Secretary, can you
13:07indicate how much the administration of this levy will cost, and who will ultimately foot
13:13the bill?
13:14Llywydd, I look forward to scrutinising this legislation in more detail going forward.
13:20It has to be said, though, that many people across Wales will feel that this will be an
13:27ill-thought-out and unnecessary legislation. I hope that my colleagues across the Chamber
13:32will see sense as this Bill makes its way forward.
13:35Mark Drakeford AM Well, Llywydd, I do regret that attempt to
13:43catastrophise what is a modest measure that simply offers local authorities the opportunity
13:53to introduce a visitor levy where they choose to do so. I've sat through many lectures in
14:02this Chamber from the benches opposite about the need for us to devolve more powers and
14:07decision-making locally, often portrayed here as an essential Conservative principle. Yet,
14:15offered an opportunity to do exactly that, we find that their reactionary tendencies
14:23very quickly overwhelm their principles.
14:28The Bill does exactly what I set out in my introduction, Dirprwy Lywydd. It offers local
14:40authorities a permissive power, which they can draw down when they make an assessment
14:47that this would be the right thing to do in their local circumstances. I was surprised
14:54to hear Peter Fox's characterisation of local authorities as organisations that clearly
15:01aren't to be trusted. As a former leader of a local authority, that would not have been,
15:06I think, his viewpoint when he was a member of a local authority in Wales, and it's not
15:12my view either. I think the Bill strikes a proper balance. It provides safeguards on
15:20the face of the Bill. Local authorities will have to follow the procedures I set out. They
15:25will have to consult their local populations and businesses. If they decide to introduce
15:31a levy, they will have to keep the money raised in a separate account for all to see. They
15:36will have to report annually on how those funds are used for purposes which are set
15:44out on the face of the Bill. The Bill is clear. The funds used can only be used for
15:50purposes of destination management and improvement. I think that provides local authorities with
15:59the right level of discretion, without the risk of those funds being siphoned away for
16:04nothing to do with the costs associated with tourism and its promotion in the future.
16:15The Member said that many people across Wales will not want to support the Bill, but the
16:21irony of the Conservative Party position on the floor of this Senate is that they believe
16:27that local people should bear all the costs associated with tourism and that visitors
16:34should bear none of them. Believe me, that is not a popular position, particularly amongst
16:41those populations who see the greatest impact of tourism in those communities. They believe,
16:47we believe, that it is simply fair that people who visit an area and who use the facilities
16:55of that area and who expect that those facilities will be kept in good orderóthat's what draws
17:01them to those places in the first placeóthat they make some small, modest contribution
17:08to ensuring that those facilities can be there for the future. Not only is it a right cause,
17:15Dirprwy Lywydd, it's a popular cause, particularly amongst those populations who otherwise are
17:21left to pick up all those costs on behalf not just of residents but everyone who visits
17:27as well.
17:28Luke Fletcher AM. I welcome the introduction of this Bill in the Senate.