The pros and cons of a tourist tax

Visitors to Wales could soon be paying more for an overnight stay amid plans to introduce a tourism tax in the country.

If the plans are confirmed Wales would follow in the footsteps of Manchester, which has introduced a tourist tax for people making overnight stays in the city and comes into operation tomorrow, said the BBC.

Many destinations around the world have tourism taxes, noted VisaGuide, including Barcelona, Venice, Thailand and Slovenia. It has proven a controversial topic though, with disagreement over whether it boosts the tourism industry or threatens its very survival.

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1. Pro: pays for costs of tourism

Supporters say a tourism tax can lead to the increasingly elusive goal of a well-managed, sustainable, and lucrative tourism industry, with the costs of tourism being picked up in a well-run way.

Recommending that the Welsh government should introduce a tourist tax, the Bevan Foundation argued that such a move would “help to reflect the true costs of tourism” such as “clearing up litter, providing car parking, keeping beaches clean” and “building public footpaths”.

2. Con: consumer spending squeeze

Some feel that adding yet more pounds to the cost of a holiday is dangerous during a cost-of-living crisis. The tourism sector in Edinburgh is, for the most part, “vocally opposed to the introduction of a tourist tax, particularly in the current economic climate”, claimed Holyrood magazine.

Marc Crothall of the Scottish Tourism Alliance told the outlet that 60% of visitors are domestic, who “may at present be reaching a tipping point due to a consumer spending squeeze”.

3. Pro: avoids overtourism

By increasing the cost to visit certain areas, a tourist tax can help reduce overcrowding and make the experience more enjoyable. This can help avoid “overtourism” – where locals or visitors feel that there are too many tourists, leading to deterioration in quality of life.

For instance, Bhutan has “only ever been reluctantly open to tourists”, said The Times, but now the mountain kingdom is “cranking its tourism tax to an eye-watering level” by charging up to $200 (£161) a day in tax.

4. Con: discourages visitors

The flipside is that by increasing the cost of visiting a particular location, tourism taxes could discourage some tourists from choosing destinations that actively want more visitors.

Some “deem this sort of levy unnecessary or even detrimental to the sector – driving away visitors or limiting their spending during their visit”, said accountants Knights Lowe. However, in a poll, hoteliers in Manchester voted 80% in favour of the tourist tax, said EuroNews, suggesting that fears it could damage tourism are not widespread.

5. Pro: supports investment

A tourist tax can generate additional cash for the local government and tourism industry, which can be used to fund infrastructure and services that benefit tourists and residents alike.

“From signage to facilities to the myriad of public realm improvements that make places attractive”, tourism infrastructure comes “at public cost”, said the Bevan Foundation, and “while the public do benefit, so too does the tourism industry”, so both parties should chip in.

6. Con: lack of transparency

Some suspect that tourism taxes will simply disappear into wider local authority budgets. Perhaps the “largest challenges” of a tourism tax is “ensuring transparency around how it’s used”, said Rosie Spinks on Skift.

If the money “just goes into a general pot because local finances are strained”, said Tim Fairhurst, secretary general of the non-profit European Tourism Association, and if it’s just seen as “a classic ‘tourists don’t vote, you can get easy money off them’”, then that is “not a smart way to go”.