Tourism tax is defined as “tax imposed on tourists when they visit a place for a certain period of time”. It doesn’t have a set value to pay per destination, and therefore can be adjusted depending on both the tourist and on/ off-peak seasons to bring in the maximum revenue for a destination, such as Venice, Amsterdam and Edinburgh. However, implementing this in destinations such as Wales needs careful evaluation.
What are the benefits?
On one hand, tourism tax can bring many benefits for residents and tourists alike, with the money being reinvested into things such as infrastructure and public services. Many, including the Bevan Foundation - founded in 2011, and an advocate for economic justice for the south Wales valleys which resulted in two Welsh Government development programs in the 2000s - share the same viewpoint that “from signage to facilities to the myriad of public realm improvements that make places attractive”, tourism infrastructure comes “at public cost” and therefore tourists should contribute towards countries lie Wales through tourism tax.
A benefit of Wales implementing a tourism tax is that Wales' most marketable point is the environment (with 39% of tourists opting to visit the Welsh countryside such as Tenby and Barmouth), and to sustain it, a tourism tax could be implemented. This not only would guarantee more visitors, as you are preserving one of Wales’ attraction points, but also ensure that the government is being transparent with the use of tourism tax. This would appease both tourists knowing that their money won't go to a ‘general pot of finances’, as well as locals who can also enjoy the environment. Moreover, introducing tourism tax could bolster the Welsh economy as Wales is a country that encompasses practically all tourist demographics, from families, who commonly visit Wales, as well as older independents and retirees, highlighting how Wales has the potential to draw a substantial amount of profit from tourism tax alone. This data clearly emphasises how Wales already has a strong customer base, with older independents, who often express a desire to visit again. This reinforces the massive influence Wales could have on tourists.
Would it be financially valuable?
Furthermore, taxing tourists even just for overnight stays in Wales would be extremely lucrative, as between April and December 2021, residents of Great Britain took 9.97 million overnight trips in Wales, whether it be from staying for a short period to simply taking a road trip through Wales.
Is Wales suitable for a tourism tax?
Additionally, one of the benefits that Wales possesses is that it is physically connected to England, meaning that a trip to Wales would still be feasible if a tourist tax was set in place compared to travelling to a country much further away in distance. Moreover, the physical borders between Wales and England continuously allow an influx of tourists from England during short holiday breaks such as half terms. This could enable Wales to continuously generate profit from tourists through tourism tax, allowing the government to receive surplus revenue each year by taxing restaurants, accommodations and introducing sales and airport taxes.
What about the multiplier effect?
A tourism tax could allow Wales to keep pavements and beaches clean, maintaining parks, footpaths and tourists. This creates a continuous cycle, known as the multiplier effect, where tourists will bring in money through tourism tax to the economy, and the money ultimately returns to the local economy (e.g. businesses/ workers/ locals of the country) and is spent over and over again.
But would it work in Wales?
Contrarily, the tourism tax itself is lucrative when implemented in destinations with a high tourist percentage, therefore maximising the revenue the government can earn to reinvest to maintain the destination. However, for a country like Wales, with a relatively low tourist rate, this could be off-putting to travellers.
What about the rest of the UK?
Although Wales is physically connected to England, The Office of National Statistics shows that Wales attracted 1 million overnight visitors in 2019, which fell by 37% to 686,000 in 2022. In comparison, Scotland’s figure only fell by 7%, from 3.46 million in 2019 to 3.2 million in 2022. Therefore, it could be argued that implementing a tourism tax in Wales, when the two other competing countries in the UK don’t, would serve to further decrease the favourability of Wales itself. Introducing tourism tax might not be the best option as Wales already isn’t pulling in HALF the figures of its neighbouring countries - out of the 41 million international holidaymakers to the UK in 2019, only around one million visited Wales - and as (as previously stated) it is already under marketed. Therefore, Wales already is statistically unlikely be a top choice to visit when comparing the UK isles. This would be worsened when adding a tax as most new tourists wouldn’t know exactly what they are paying for, therefore not making it seem like worth the money compared to Scotland and England which currently haven’t implemented one.
What other impacts could there be?
Furthermore, if tourists still do choose to visit Wales, cheap accommodation will be impacted by the tax, resulting in fewer people spending money, thus generating less revenue for Wales as a whole, reducing its ability to invest in marketing and preserving its tourism destinations. In addition to this, as previously stated, elderly people/ families are one of the main tourist demographics for Wales, and implementing a tax during a period of inflation could potentially encourage them to travel to cheaper and well-marketed alternatives. This could result in Wales losing even their most ‘loyal’ tourists, thus more potential profit.
How does Wales fare internationally?
Moreover, the level of competition Wales has to face as a tourist destination internationally only worsens as it has such a low profile as a tourist destination, with it only pulling 1.2 million tourists in 2019, whilst places such as France regularly have pulled 77.7 million tourists since 2010. With Wales being ranked 45th out of 50 for overall familiarity in the Anholt-Ipsos Nation Brands Index 2020, this data highlights more than ever the astronomical difference in profile between both countries as a tourist destination, emphasising how crucially Wales needs to be advertised in order to compete with rival destinations.
So, is it worth it?
To conclude, I think that introducing a tourism tax within Wales could be a viable option to generate profit. However, to achieve this, Wales must invest in marketing beforehand. Tourism tax in theory is a fantastic idea as it conserves the environment for locals as well as investing in infrastructure such as transport for everyday people to use, despite also being at a reasonable enough amount that the majority of tourists can afford it, but Wales itself needs to be advertised first.
What do you think? Do you think tourism tax should be implemented in Wales or not? Drop a comment below!
Sources
https://www.gov.wales/sites/default/files/statistics-and-research/2021-03/tourism-profile-midwales-2017-2019.pdf https://www.gov.wales/sites/default/files/statistics-and-research/2021-03/tourism-profile-sout h-west-wales Visits to tourist attractions: 2021 | GOV.WALES-2017-2019-summary.pdf https://www.bbc.co.uk/news/uk-wales-66171190 https://www.itv.com/news/wales/2022-02-13/welsh-governments-tourism-tax-catastrophic-for -hospitality-say-businesses Search - Office for National Statistics Wales as a global tourist destination - Welsh Affairs Committee Come to lovely Wales (it's really awfully quiet): Tourism groups slam £7m budget to promote their country as 'hopelessly inadequate' | The Independent | The Independent Wales 'undersold' overseas as tourist destination, say MPs - BBC News Tourism Tax: A blessing or a curse | STR Exploring tourism taxation as a method to fund a regenerative future | City Nation Place