Three reasons to introduce a tourist tax

Economy Tenby at night
Photo by Beata Mitręga on Unsplash
ViewsJune 21st, 2021

With a tourist tax on the agenda again, Victoria Winckler, Director of the Bevan Foundation, says it shouldn’t be dismissed out of hand. 

Five years ago, the Bevan Foundation recommended that the Welsh Government should introduce a number of new, devolved taxes. Amongst them was a proposal for a tourist tax. After an initially muted response, the tourism lobby is now vociferously opposing the idea arguing that they need more financial support. 

So what would a tourist tax do?

First, a tourist tax would help to reflect the true costs of tourism.  Tourists, we argued, generate extra costs from things like clearing up litter, providing car parking, keeping beaches clean, building public footpaths and so on.  We’ve all seen the horrendous mess left in beauty spots and the crazy parking in our national markets.

These costs are picked up by the public purse, as part of their statutory duties, while the main benefits of tourists go to tourism businesses themselves. For sure, tourist businesses pay business rates, income tax or corporation tax and VAT – but so too do all other business. 

Second, pitched at the right level, a tourist tax would not deter visitors.  We suggested that a tourist tax should at a level that generated useful revenue without damaging the market. For example a tax of around £1 per person per night would add £28 to the cost of a family of four staying for a week.  We doubt very much that most visitors are so sensitive to prices that £28 would mean they book their holidays in Bognor not Bangor.  Looking at a small hotel or B&B in Tenby, a £1 levy is less than 1% of the cost for a night’s stay – less than the rate of inflation and far less than the jump in accommodation costs witnessed this summer.

Third, the revenues from a tourist tax could support investment in tourist infrastructure, from signage to facilities to the myriad of public realm improvements that make places attractive. These all come at public cost, and while the public do benefit so too does the tourism industry. Indeed, the tourism industry already benefits from significant public support via Visit Wales and associated funding for improving businesses. I cannot think of any industries other than agriculture that has its very own marketing programme with extensive advertising and brochures all produced at no charge to businesses.

The last year must have been truly horrendous for tourism and hospitality, and there should be every sympathy for businesses who are struggling to survive let alone thrive.  But a tourist tax would not – and indeed could not – be introduced this year and probably not in 2022 either.

Rather than a blanket rejection, the tourism industry should consider the longer-term benefits of investment in a sustainable visitor industry, with a tourist tax raising much-needed revenues to reinvest in marketing and facilities. 

Victoria Winckler is Director of the Bevan Foundation

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