A NEW tourism tax of £1.25 per person per night could be introduced in Wales starting April 2027, following the publication of draft legislation by the Welsh government. The levy, applicable to hotels, B&Bs, and self-catered accommodation, would be charged per person, including children. A reduced rate of 75p would apply to stays in hostels and campsites.

The Welsh government argues the levy will raise approximately £33m annually, supporting services and infrastructure in tourism hotspots. Funds raised will be ring-fenced for projects such as promoting tourism, improving visitor services, and supporting the Welsh language. However, the plans have sparked criticism from opposition parties and industry groups, who warn the tax may deter tourists and harm Wales’ vital tourism sector.

Industry concerns

The tourism sector, employing 159,000 people—nearly 12% of Wales’ workforce—has expressed concerns about the impact of the levy on visitor numbers. Critics, including the Wales Tourism Alliance, argue there is no guarantee the revenue will enhance the visitor experience, potentially making Wales less attractive compared to neighboring regions without similar taxes.

The Welsh Conservatives oppose the measure, calling it a “barrier to tourism” and warning of increased costs for families and additional bureaucracy for small businesses. Shadow Minister for Finance Peter Fox stated: “This tax is the wrong one for Wales and the wrong one for our tourism industry.”

How it works

The levy will not apply to stays of more than 31 nights or to individuals in temporary accommodation or homeless hostels. The tax will also require providers of short-term accommodations, such as Airbnbs, to register under a licensing scheme set to be introduced through additional legislation before 2026.

Councils adopting the levy must consult stakeholders and provide 12 months’ notice before implementing or increasing the charge. While the levy is optional for local authorities, it is expected to be a divisive issue among councils. Some may view it as a means to generate revenue for improving tourism infrastructure, while others may fear it could drive visitors to neighboring regions without the tax.

Broader context

Visitor levies are not new; countries worldwide employ similar systems to fund local services and improve tourist destinations. Welsh Finance Secretary Mark Drakeford defended the plan, saying, “It’s fair visitors contribute towards local facilities, helping to fund infrastructure and services integral to their experience.”

Cardiff Council has indicated interest in exploring fiscal powers like the levy as part of its broader strategy to invest in the tourism sector. Meanwhile, critics remain skeptical, with some calling for clearer commitments on how funds will be spent to ensure the levy provides tangible benefits for tourists and communities alike.

Next steps

For the tax to take effect, the proposed legislation must pass through the Senedd. If approved, councils will have discretion over implementation, ensuring any decision is tailored to local priorities and needs.

Whether this initiative strengthens Wales’ position as a leading destination or creates obstacles for the tourism industry remains a point of contention.

Expert’s viewpoint

Corporate partner at law firm Spencer West LLP: “The introduction of a tourism levy in Wales could have significant implications for the leisure, tourism, and hospitality sectors. Whilst the legislation aims to reduce the burden on local infrastructure and services resulting from a regular influx of tourists by providing additional funding for them, it may also create financial and operational challenges for businesses in these industries.

From a positive perspective, the reinvestment of funds into local infrastructure could enhance visitor experiences, potentially attracting more tourists over the long term. Improved facilities and local amenities could also help bolster community support for tourism, fostering a more sustainable relationship between visitors and local communities.

However, the levy could impose additional costs on tourists, potentially deterring budget-conscious visitors or driving them to alternative destinations without such charges. This risk may disproportionately affect smaller accommodation providers, hostels, and campsites, which rely on price-sensitive customers. Additionally, implementing the scheme and managing the levy collection could increase administrative burdens and compliance costs for businesses.

Concerns raised by industry representatives, such as the potential impact on employment and competitiveness, highlight the need for careful planning and extensive consultation and local authorities will have to balance the need for increased revenue with the industry’s overall economic health.”