We need to talk about tourism

Image by HildaWeges on Adobe Stock
ViewsMay 24th, 2022

Victoria Winckler, Director of the Bevan Foundation, calls for a mature debate about the pros and cons of tourism.  

Tourism is a hot topic. The prospect of a tourist tax, changes in council tax levied on second homes and the redefinition of a holiday let, not to mention a £7.50 parking fee at Penyfan, have all brought howls of protest.  

Equally, visitors dropping litter (and worse), locals priced out of their communities and roads closed by parked cars or crowds attending events have also raised hackles and created lasting social and environmental problems.  

There have been some pretty vitriolic articles in the press recently, claiming that ‘most Welsh holiday cottages will be lost’, that the Welsh Government’s plans are ‘anti-English’ or that poor people are being ‘priced out’ of visiting national parks. While this coverage might vent spleen it is not a productive way to resolve the very real issues about the pros and cons of tourism.  

Let’s start with the positives.  

Tourism is without question an important part of the Welsh economy. Pre-Covid there were 11,500 businesses employing 132,000 people.  That’s around 10% of the workforce overall – and much higher in some areas. 

Tourism is also important for Wales’ economic output. While some have claimed it is Wales’ largest industry, it in fact accounts for 6% of GVA in 2016 – some £3.06 billion.  To put it in context, tourism’s output is larger than that of professional and scientific services, is broadly comparable with construction but is less than half that of manufacturing.  

So it is important – but not critical.  

But there are negatives too.  

There is no doubt that tourism puts pressure on destinations – the estimated 87 million day visitors and 10 million overnight visitors do not come without cost.  In terms of public services, tourism puts pressure on everything from beach cleaning to policing to path maintenance, increasing costs in popular localities.  Tourism is also by far the worst sector for providing low-paid, insecure work, which in itself costs the public purse as it supports low-income households.   

An in terms of housing, second homes and holiday lets reduce the supply of permanent homes to buy or to rent and increase the cost often far out of reach of local people. And there are knock-on effects on public services (such as buses and schools which cannot be sustained) and of course on local language and culture.  

Should tourism face extra taxes? 

The principle that a business should pay for external harm or damage that it causes is well established (although not always implemented). For example, companies that pollute air or water are fined, businesses have to pay for the disposal of hazardous waste, and so on. As a matter of principle, then, the tourism sector (by which I mean businesses and visitors alike) should pay for the social, economic and environmental harms that their activities create.  

The most efficient way of doing this is to impose an additional tax or levy. This is precisely why the Bevan Foundation urged the Welsh Government to consider a tourist tax some five years ago.  While that is still some way off for serviced accommodation, second homes and holiday lets are finally being brought into the fold with hikes in council tax and the closure of the small business loophole.  

So what about current plans? 

Any new tax or levy needs to be well-designed if it is to achieve its desired intention and not cause unintended consequences.  It is fair to say that the jury is out on the Welsh Government’s latest plans.  

The tourism industry is arguing the proposed requirement that holiday homes registered as businesses be let for a minimum of 182 days a year will see large-scale closure of accommodation. Yet statistics show that the average occupancy of self-catering accommodation pre-Covid was 57% – or 208 days a year.  On the face of it only a minority of poorly-performing holiday lets would fall foul of this requirement – and arguably they are not viable businesses.   

The question of a levy on serviced accommodation is also not clear cut. The Bevan Foundation suggested a tax of £1 per person per overnight stay. At £14 for two adults for a week it is hardly going to make people opt for Cornwall instead. But the real challenge is the eye-watering 87 million day visitors who often contribute absolutely nothing to the local economy but impose significant costs. Attractions such as Eryri, Penyfan and the Gower might be free to use, but they’re not free to maintain.  

What next? 

Nobody expects any business happily to accept new taxes or any other restrictions in its activities. To that extent the tourism lobby is doing what you might expect.  

However, the negative as well as positive effects of tourism are unarguable and need to be addressed.  

It may well be that the proposals in respect of council tax, letting days and – in due course – an overnight tax are not well thought out and will have unintended and undesirable consequences. The solution is surely for Welsh and local government, businesses and worker representatives to work together to get something that sees tourism grow in ways which are socially responsible and environmentally sustainable as well as economically viable.  

One Response

  1. Mrs L Jones says:

    I part own a small unit in what was derelict building, others own other units.
    The number of nights suggested will mean we may no longer be able to run the business.
    It seems to be highly likely that many holiday lets will be in this position. Without the conversion this building would have probably be left derelict. The proposal seems very shortsighted.

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