In 1789, the great American politician Benjamin Franklin first used the famous phrase “'In this world nothing can be said to be certain, except death and taxes."
I am sure that two hundred and seventeen years later, the Welsh tourism industry would find little irony in that statement following the Local Government Association’s recommendation that a ‘bed tax’ should be set to fund public transport schemes.
The proposed 10% tax per night on all overnight accommodation, added to the 17.5% of VAT, would result in the UK becoming one of the highest taxed holiday destinations in Europe. This is because tourism in other European countries is charged a far lower level of VAT, such as the discounted rate of 5.5%in France.
Such a tax would have a devastating impact in Wales, which is dependent upon tourism for over £2 billion of income every year and currently employs 100,000 people. This is an industry that has made huge strides to recover from disasters such as foot and mouth, and faces increased competition from cheaper flights to the cities and sunspots of Europe.
The UK would not be the first country to introduce such a draconian scheme. In the USA, this supplement to the price of a hotel room has been in existence for a number of years, although it is deeply unpopular with both consumers and the accommodation industry. It is also being charged in various European countries, although when Italy introduced the tax, it was quickly forced to abandon it due to a large public outcry.
Analysts who have examined the impact of the tax have suggested that it could wipe up to £50 million off annual Welsh accommodation revenues. They also suggest that it would add £100 to the cost of an average family of four’s holiday, pricing much of the tourism industry in Wales out of the market relative to cheaper destinations in Europe, especially as research from Travelodge indicates that up to three quarters of their customers would be more likely to travel abroad if this tax were implemented. And it is not as if the tourist industry in Wales is at its strongest at the moment. For example, the latest statistics for the index of accommodation in Wales shows that output for the latest 12 months had decreased by 7.7% as compared to a year ago.
Whilst the reform of council tax and local transport infrastructure are issues that need to be dealt with urgently, the imposition of another tax is clearly not the way forward. Indeed, as every driver knows, how much of road and petrol tax has actually gone to improve the transport infrastructure in this country? Similarly, how tempting would it be for councillors to use this local ‘bed tax’ to support other critical areas of local authority funding, rather than reinvesting it in infrastructure and transport projects that support tourism.
At a time when the business sector is being suffocated by red tape and drowned by increase after increase in taxation, the introduction of yet another financial burden on tourism in Wales would be a massive blow for the industry. More importantly, it would completely undermine the years of investment by the Wales Tourist Board, particularly through its excellent grant scheme to raise the quality of the tourism experience in Wales.
At a time when Wales is trying to develop a sustainable high value-added tourism industry, it is clear that all our politicians in Wales should be fighting hard to ensure that such a tax never sees the light of day, and that the tourism industry in Wales continues to go from strength to strength. Indeed, perhaps it about time for Welsh politicians to begin lobbying parliament to consider reducing VAT on the UK tourism sector, bringing us into line with other European nations and ensuring that our quality product can be offered at a more competitive price.
I am sure that two hundred and seventeen years later, the Welsh tourism industry would find little irony in that statement following the Local Government Association’s recommendation that a ‘bed tax’ should be set to fund public transport schemes.
The proposed 10% tax per night on all overnight accommodation, added to the 17.5% of VAT, would result in the UK becoming one of the highest taxed holiday destinations in Europe. This is because tourism in other European countries is charged a far lower level of VAT, such as the discounted rate of 5.5%in France.
Such a tax would have a devastating impact in Wales, which is dependent upon tourism for over £2 billion of income every year and currently employs 100,000 people. This is an industry that has made huge strides to recover from disasters such as foot and mouth, and faces increased competition from cheaper flights to the cities and sunspots of Europe.
The UK would not be the first country to introduce such a draconian scheme. In the USA, this supplement to the price of a hotel room has been in existence for a number of years, although it is deeply unpopular with both consumers and the accommodation industry. It is also being charged in various European countries, although when Italy introduced the tax, it was quickly forced to abandon it due to a large public outcry.
Analysts who have examined the impact of the tax have suggested that it could wipe up to £50 million off annual Welsh accommodation revenues. They also suggest that it would add £100 to the cost of an average family of four’s holiday, pricing much of the tourism industry in Wales out of the market relative to cheaper destinations in Europe, especially as research from Travelodge indicates that up to three quarters of their customers would be more likely to travel abroad if this tax were implemented. And it is not as if the tourist industry in Wales is at its strongest at the moment. For example, the latest statistics for the index of accommodation in Wales shows that output for the latest 12 months had decreased by 7.7% as compared to a year ago.
Whilst the reform of council tax and local transport infrastructure are issues that need to be dealt with urgently, the imposition of another tax is clearly not the way forward. Indeed, as every driver knows, how much of road and petrol tax has actually gone to improve the transport infrastructure in this country? Similarly, how tempting would it be for councillors to use this local ‘bed tax’ to support other critical areas of local authority funding, rather than reinvesting it in infrastructure and transport projects that support tourism.
At a time when the business sector is being suffocated by red tape and drowned by increase after increase in taxation, the introduction of yet another financial burden on tourism in Wales would be a massive blow for the industry. More importantly, it would completely undermine the years of investment by the Wales Tourist Board, particularly through its excellent grant scheme to raise the quality of the tourism experience in Wales.
At a time when Wales is trying to develop a sustainable high value-added tourism industry, it is clear that all our politicians in Wales should be fighting hard to ensure that such a tax never sees the light of day, and that the tourism industry in Wales continues to go from strength to strength. Indeed, perhaps it about time for Welsh politicians to begin lobbying parliament to consider reducing VAT on the UK tourism sector, bringing us into line with other European nations and ensuring that our quality product can be offered at a more competitive price.
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