Next steps towards introducing the UK’s first tourism taxes

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A recent statement from the Welsh Government announcing a public consultation to be conducted in “Autumn 2022”, on the introduction of an adoptive local authority based tourism tax may have passed largely unnoticed, at least outside of Wales. We think it may be of great significance, not just for tourism businesses and for domestic and international visitors to Wales but also for all other parts of the UK. The arguments for and against such taxes may ebb and flow but what only ever seems to increase is the pressure on the amount of public funding available to support local services, tourism and destination management, including within that, destination development and promotion.

Although the Welsh Government’s statement is brief, it gives some clear indicators of the rational and the purposes for which such taxes might be used. Critically the announcement follows on from last year’s Government elections and the Welsh Labour and Plaid Cymru’s Cooperative Agreement, which now contains a commitment to introduce an (adoptive) tourism tax. Unless there are some major unforeseen developments, the consultation will almost certainly be about how, when and in what form such taxes will take, rather than about whether they should be introduced at all.

Meanwhile we know that the current administration in England is dead set against a new, additional taxes, notably even rejecting recent industry led proposals to pilot an accommodation-based tax in Liverpool (central area). It is also wrestling with how, if at all, to respond positively to the recommendations of the English DMO review with, in its original form, a £51m price tag over its first three years.

At some point soon someone is going to have to ask the question of the Westminster Government, “so with what then do I mend my bucket?”. Ignoring the well-known market failure issues within tourism, presumably in the hope that acting in universal, voluntary cooperative spirit the private sector will rise to the challenge, isn’t a workable solution. Despite best endeavours it hasn’t worked for the last 30 plus years, so what fundamental changes have occurred to make anyone think it might suddenly work in future? For one of the better descriptions of the marketing aspect of the market failure issues see the 2017 DCMS produced but never officially published paper at: https://britishdestinations.net/strategies-and-policies/tourism-industry-strategies-policies/market-failure-in-tourism/

If nothing else the proposals to be adopted by some or all local authorities in Wales will test and prove, one way or the other, some of the diametrically opposing views on the perils and positives of a UK based tourism tax on domestic and international inbound tourism. We will then know for certain if a tourism tax represents a viable, predictable and sustainable means of financing appropriate levels of local management of destinations for the mutual benefit of the visitor and the visited. Next step in development of tourism tax | GOV.WALES

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