The following amendments have been selected: amendment 1 in the name of Jane Hutt, and amendment 2 in the name of Rhun ap Iorwerth. If amendment 1 is agreed, amendment 2 will be deselected.

The next item is the Welsh Conservatives’ debate on a tourism tax, and I call on Nick Ramsay to move the motion. Nick Ramsay.

Motion NDM6546 Paul Davies

To propose that the National Assembly for Wales:

Does not believe that a tourism tax should be implemented in Wales.

Motion moved.

Diolch, Llywydd. Today’s motion is very clear: we simply do not want to see a tourism tax implemented in Wales. I imagine most of you will have worked that out by now. [Laughter.] Members are aware that Wales now has significant tax-raising powers under the Wales Acts of 2014 and 2017 and that, earlier this year, the Welsh Government consulted on proposed new taxation methods. That consultation resulted in proposals for four new taxes to be introduced—a tourism tax, a levy for social care, a vacant land tax, and a disposable plastics tax. I was going to mention the 305 responses received to the call by the Government for ideas about proposals for new taxes, but that was mentioned by earlier Members. And I did hear the Cabinet Secretary’s response to those questions, and you seemed to think that that was more responses than you were expecting initially. So, I will leave that be for now.

Today’s debate is about solely focusing on the impact and concerns that the implementation of a tourism tax could have, in any shape or form that that might take, even if the amendments to this motion don’t entirely reflect that. If I can turn to the amendments briefly, we will not be supporting the Labour amendment, not surprisingly, which deletes our entire motion. Although a lot of that amendment is factual, there are other parts of that we cannot agree to. But I have to say that at least amendment 1 is relevant to the motion compared with the corker, amendment 2, supplied by Plaid Cymru, which is nothing to do with our motion at all. I’ve got to say, I do find it ironic that the party that has probably wanted tax devolution longer than anyone else here in this Chamber doesn’t want to talk about a major tax proposal, such as a tourism tax, when this group has put a debate about this tax and about this proposal on the table.

I’m grateful to the Member for giving way. Can he tell me what his fiscal vision for Wales is?

And there we have it. Plaid Cymru Members will do anything to distract from talking about a tourism tax. Fiscal vision for Wales, landfill tax—you’ll talk about anything, but you don’t want to talk about this.

Now, to be fair to the Member—not the Member who intervened, but Adam Price—he was more than happy to talk about and endorse a tourism tax in the draft budget statement only a couple of weeks ago, until he was silenced by other Members of his group who clearly think it’s a daft idea. Now, there are two options here. Either Plaid Cymru are happy with a tourism tax [Interruption.] Dai Lloyd, I’m not sure which side of the fence you’re sitting on this one, whether you’re on the Adam Price side or the other side of your group. Either Plaid Cymru are happy with a tourism tax or they are not. I suspect the truth of the matter, as is quite clear, is that it depends who you speak to in the Party of Wales. There have certainly been different noises coming from different quarters over the last couple of weeks. [Interruption.] Anyway, you may chunter. I think the people of Wales deserve to know where the Party of Wales stands on this issue, and we look forward to hearing what you have to say about a tourism tax when you contribute, as I imagine you will later.

The Deputy Presiding Officer took the Chair.

So, back to the tourism tax. Scepticism is not limited to Assembly Members. Even the Bevan Foundation, who have publicly supported, to be fair to them, the tax, at least in its embryonic form, have conceded that they simply don’t know what the impact of a tourism tax in Wales would be. I’m sure that even the Cabinet Secretary would say at this point we do not have an assessment of what that impact would be. This proposal has met with widespread criticism from the tourism sector in Wales. The Wales Tourism Alliance have clearly set out their opposition to the tax, arguing that

Whilst the WTA is not opposed to fair taxation, the WTA opposes a Tourism Tax on the grounds that they would harm the hospitality and tourism sector and is simply not a fair tax’.

We believe the Wales Tourism Alliance is right: a tourist tax is not a fair tax, and as the basis of the Welsh Government’s proposals for new taxes in Wales, we’ve been told in the past that fairness, equality and non-regressiveness was at the heart of their strategy. That does not feature in the proposals for this tax.

A tourist tax could result in these businesses having to increase the cost of their facilities to accommodate any rises, and it could have a detrimental impact on local economies across Wales. We know that the tourism sector in Wales makes a huge contribution to the Welsh economy, and I’m sure that throughout this debate, Members from different parts of Wales will be highlighting the very real contribution that tourism makes to their constituencies and regions. I’ve had my own postbag, as I know other Assembly Members have. One e-mail here from a caravan park owner in my constituency who is very concerned about the effects that a tax implemented here would have on border businesses, and the way that tourists who would otherwise come to Wales may simply stay the other side of the border. We know that there is a long, porous border between England and Wales—it’s quite different to the border between Scotland and England—and we would not want to see anything implemented on this side of the border that would discourage people from coming here and spending their money on Welsh businesses and the Welsh tourism sector.

It’s crucial that the Welsh Government therefore protects and supports the Welsh tourism sector so that it continues to make a healthy contribution to our economy. Let us not forget that the tourism industry is a competitive marketplace and businesses in Wales are not only competing on a global level but on a domestic level with our counterparts across the rest of the UK. If the Welsh Government presses ahead with the introduction of a tourism tax in any shape or form, then it simply makes other places in the UK a more cost-attractive proposition than holidaying here in Wales.

In places like my own constituency, which, as I’ve said, are geographically close to the English border, it could have serious implications if people choose to stay the other side of the border in the future. In assessing the potential of a tourism tax there seems to be no assessment whatsoever of the impact on border constituencies, and it’s frankly worrying that the Welsh Government has allowed these proposals to be further considered.

And of course it’s not just hotels and accommodation providers that could feel the pinch of this new tax. Wales is a small country with intricate supply chains, particularly in the field of hospitality and tourism. Pubs, clubs, cafes and shops are all businesses that could feel an impact if these proposals were to go ahead. A tourist tax could be incredibly harmful to the footfall of many of these businesses across Wales, many of whom rely on tourism income to stay in business.

As I say, it’s not just AMs who’ve been expressing these concerns, the FSB have also put their own views forward and I agree wholeheartedly with the FSB’s view that the Welsh Government should, and I quote, avoid supporting any levy that is targeted almost exclusively at small businesses.’

Areas of Wales that are most dependent on tourism to support the local economy are often also the same areas that have the least diverse economies, and we must be careful that the full potential impact of a new levy on small tourism businesses is understood.

We’re afraid that there’s simply been no assessment of regional inequalities and the role of local tourism industries, and no understanding of the potential impact of this on the industry as a whole. This tax, accompanied by the impact of the recent rate revaluations for some businesses, and the fact that industry already pays 20 per cent in value added tax, will surely do nothing to help the industry—[Interruption.] I hear some comments from Members sitting opposite on how we can oppose this. Well, you clearly don’t care about the impact of it or you would possibly have put an amendment forward that even mentioned the subject that this motion is talking about.

If you’re serious about supporting the tourism industry in Wales, there’s one easy way that your party could do that. We’re talking about taxation—what about value added tax? What about VAT? What about reducing VAT? You could do that in a matter of weeks in the budget, if you’re serious about supporting the tourism industry.

We’ve had value added tax, we’ve had plastics tax—once again, the party opposite wants to talk about any tax but will not talk about the tourism tax. I haven’t even heard it mentioned yet. But, as I say, I look forward to your contribution later.

So much for a welcome in the hillside. Will the introduction of a tourism tax send the right message of welcome to visitors? We don’t feel it will. No, we fear that it will send the opposite message, and it sends the message to businesses that the Welsh Government is determined to squeeze our small businesses as much as it can by implementing a tax such as this.

I very much hope that this tax will not go forward and will not be implemented. There is still time for the Welsh Government to look again and reconsider this. In that light, I urge Members to support this motion and send a clear statement to our tourist industry today that we are on your side and we want to continue to work with you to create a Wales that is open, accessible and affordable to all.

Thank you very much. I have selected the two amendments to the motion. If amendment 1 is agreed, amendment 2 will be deselected. Can I ask the Cabinet Secretary for Finance and Local Government to move formally amendment 1, tabled in the name of Jane Hutt?

Amendment 1—Jane Hutt

Delete all and replace with:

To propose that the National Assembly for Wales:

1. Notes that:

a) the Wales Act 2014 includes powers for Wales to propose new taxes in areas of devolved responsibility;

b) the Welsh Government’s intention to test the Wales Act machinery for proposing and introducing new taxes in areas of devolved responsibility;

c) following feedback from the public a potential tourism tax has been identified as a proposal for consideration; and

d) no decision has been made to introduce a new tax in Wales.

Amendment 1 moved.

Formally.

Thank you. I now call on Steffan Lewis to move amendment 2, tabled in the name of Rhun ap Iorwerth. Steffan.

Amendment 2—Rhun ap Iorwerth

Delete all and replace with:

To propose that the National Assembly for Wales:

Believes that a disposable plastics tax should be implemented in Wales.

Amendment 2 moved.

Diolch, Dirprwy Lywydd. I was perhaps naively looking forward to a mature debate this afternoon. Sadly, that’s not been forthcoming. The Member for Monmouth was conspicuous in his silence this morning in Finance Committee when we heard evidence from experts on the proposed tourism levy. It’s a pity that evidence is not something that he wants to include in his contributions in this Chamber. Just to make it clear that the introduction of a tourist tax in Wales is not Plaid Cymru policy. It is not Plaid Cymru policy. We, however, welcome—.

Andrew R.T. Davies rose—

I’ve just started, so I’ll make progress, but I’m happy to give way later on. [Interruption.] It is not Plaid Cymru policy. However, we welcome very much the Welsh Government’s approach in introducing four ideas for further research and further testing, because the contradiction in the contribution from the Member for Monmouth was that we didn’t have any evidence in order to make a firm decision. The whole point of the process that has been announced in the budget is that we gather the evidence to make a firm decision. I’m happy to give way to the leader of the opposition, if he would like to—.

Thank you very much for taking the intervention. The contradiction in your opening remarks is amply amplified by, obviously, Adam Price, as remarks in the budget statement that came, where he did say that there was merit in looking into a tourist tax and delivering a tourist tax here in Wales. So, he was speaking in his capacity as the Plaid Cymru spokesperson, surely that is what he’s speaking on: Plaid policy.

Perhaps the Member’s translation equipment isn’t working or something—.

No, no. He spoke in English because it was my intervention.

It is not Plaid Cymru policy to introduce a tourism tax. We welcome the exploration of four taxes, as has been outlined by the Welsh Government, to gather evidence because we are an open-minded party, willing to look at new ideas, new innovations, because let’s face it, Dirprwy Lywydd, whenever there is a new idea in the course of politics in these islands, the Conservative Party are always on the wrong side. We wouldn’t be sat in this Chamber today had they had their way because they are always on the wrong side of history, and that is true for their policy on taxation.

As Wales’s second largest employer, tourism is the backbone of the economy in many parts of our country; it supports, as the Member for Monmouth has said, 120,000 jobs and it’s of vital importance to all regions of our country. Currently, the tourist industry in the United Kingdom faces a disproportionately high tax burden compared to our other key industries and to other countries in Europe. Only Switzerland places a larger tax burden than the United Kingdom—[Interruption.]—on its tourism industry. I’m sorry, I think I’ve been pretty generous; I’d like to make progress. Sixteen out of 19 countries in the eurozone have a VAT rate for tourist services that is lower than 10 per cent. Our closest neighbour, and, in many ways, our direct competitor, Ireland, reduced the rate of VAT to 9 per cent in 2011: 57,000 extra jobs were created as a result. In a globalised and increasingly competitive market, Wales needs every advantage possible to sell ourselves as a tourist destination.

Our tax system, overseen by the United Kingdom Government, currently puts Wales and the many small businesses that are the foundation of our tourist industry at a disadvantage. Plaid Cymru has repeatedly called for a VAT cut on tourist services from 20 per cent to 5 per cent. It is estimated—. Evidence suggests that the reduction would create over 5,500 thousand jobs in Wales, whilst injecting £166 million into the Welsh economy. Given the strategic importance of tourism as an industry to our nation, Wales could become a tourism VAT cut test bed if the Conservatives wanted it to be so.

The Conservatives’ new-found interest in the health of the Welsh tourism industry is to be very much welcomed. And I assume, therefore, given their concern about the tax burden on the tourist sector in Wales, that the Welsh Conservative party has succeeded in persuading Philip Hammond to deliver a cut in VAT in tourism when he unveils his budget in a few weeks’ time. That is Plaid Cymru’s policy on tourism and taxation in Wales, and we will be placing an amendment to the UK budget—

I’d like to listen to the mover of the amendment, please. Thank you.

[Continues.]—in order to achieve it. Thank you, Dirprwy Lywydd.

If we’re going to meet the target to reach zero waste by 2050—coming onto Plaid Cymru’s amendment—we will need radical changes to our behaviour, to the goods we consume, and their packaging. And of the four taxes that the Welsh Government’s proposing to undertake further inspection into, it is the tax on disposable plastics that is Plaid Cymru policy and that featured in our manifesto for the 2016 elections. Wales was pioneering in introducing the plastic bag charge in 2011, and we saw a reduction in the use of plastic bags by 71 per cent as a result. A tax on disposable plastics is the next step forward to disincentivise the use of other non-recyclable plastics, like takeaway boxes and coffee cups, and to encourage businesses to find recyclable alternatives.

In conjunction and in conclusion—. In conjunction with other schemes like can and glass return-deposit schemes, Wales can continue to lead the world in meeting our recycling targets and reducing the waste that we send to landfill or incineration. We now have the powers to shape our own distinct tax system. As we do so, we have the opportunity to take a flexible, innovative approach to taxation that balances the need to raise funds for the public purse with an understanding of the power that taxes can have to change behaviour, and I look forward to all parties contributing to the historic opportunity the country has to shape its own fiscal policies in the years ahead.

I’m delighted to have the opportunity to take part in this debate. In the few weeks that this idea’s been floated by the Welsh Government, I personally have received a huge amount of correspondence from businesses, individuals and trade organisations that are, without exception, against this idea. Let me be clear: I am pleased that the Assembly now has some responsibility for its taxes, but if taxes are going to be imposed then they’ve got to be not only fair but also have the effect they are designed for. The worst type of tax is one that impacts on the individual business and reduces income and therefore tax take, and from what I see, this proposed tourist tax is such a tax. There is no evidence that it works. There’s no evidence that implementing it across the board throughout Wales would be effective. And in a nation where we share such a long land border with England and compete with England for many tourists, it promises to be counter-productive.

I represent a constituency that covers two counties where the tourism industry is key to our economic prosperity. In Pembrokeshire, tourism is worth £585 million a year, and in Carmarthenshire £370 million a year. The tourist industry creates the equivalent of 5,683 full-time jobs in Carmarthenshire alone. Whilst I’m not claiming that the whole industry would be put at threat, it is undeniable that a tourism tax would have a serious impact on visitor numbers and consumer spends.

I have looked at how such a tax or occupancy levy or bed tax works in other European nations. We need to remember though that, traditionally, occupancy rates are far higher than in the UK, and therefore we may not be comparing like with like, Cabinet Secretary, and that is something I would like you to really address. For example, in Germany, business travellers are exempt. Belgium reduces VAT to all Belgian hotels and restaurants from 21 per cent to 6 per cent, but it does then have a city tax on top. I do laugh slightly at Plaid Cymru saying they want to be responsible for their fiscal powers and that they’re looking forward to it. Well, hurrah, I agree with that, except you spent most of your debate talking about a tax that we actually have no responsibility for and no leverage on, which is the rate of VAT. Portugal—[Interruption.] Portugal only applies the tax for the first seven days of travel. So, what I’d like to understand, Cabinet Secretary, is what kind of models you would be looking at, how you would be examining them and how you would be evaluating them against the current background that we have in the United Kingdom, because whether it’s Labour in Westminster or the Conservatives in Westminster, VAT has been at this level for quite some time and I don’t see it changing anytime soon and we need to understand that to make sure that we do not overtax our own people.

The tourism sector in Wales does make up the highest share of workforce of any of the UK nations: 12.7 per cent of the total workforce, compared to 10 per cent in Scotland, 8 per cent in England and only 4 per cent in Northern Ireland. So, tourism is incredibly important to our nation and to our economy. Twenty-five per cent of all VAT-registered businesses in Wales are in the visitor economy.

As far as Pembrokeshire and Carmarthenshire are concerned, I’m worried that it will hit locals just as much as tourists. It will make people think twice about having that night away in a local hotel, staying over at a wedding or holidaying in neighbouring parts of Wales. It will have a knock-on effect on other local businesses. In Pembrokeshire and Carmarthenshire, we’ve encouraged many, many farmers to diversify, and there are some truly spectacular successes. But how will this tax impact on those diversified businesses?

Whilst the major holiday season is the main income earner for the tourism sector in Wales, we also find the shoulder season an important period for the industry. However, this mainly attracts UK visitors and I am concerned about how a tourist tax will impact on that particular market. We will be less attractive than Cornwall.

The UK currently ranks one hundred and fortieth out of 141 countries for price competitiveness, primarily due to the level of tax that visitors already pay. The UK charges a full rate of VAT on all three components of visitor expenditure: accommodation, restaurant meals and attractions. Other parts of Europe don’t. Also, our VAT is twice the European average. By adding a further tax, this will then make Wales even worse off and I’m concerned that this is just another tax for the conglomerated budget of the Welsh Government. Will this money be ring-fenced? Who will collect it? How will it be reinvested in tourism? And, unlike the tax on plastic bags, which was designed to change culture and behaviour, this, Cabinet Secretary, seems to me to be just a tax on wealth and leisure and I would like to know how much it would cost to implement and the ongoing consequences.

I did think that the premise of today’s debate—. It seems to me, the Tories don’t actually want a debate at all; they’ve called for a debate, but what they don’t want is a debate. And, I would’ve thought—perhaps naively—that politicians, regardless of colour, would be eager to have a national conversation about the fundamental issues of how we raise and how we spend taxes. The fact that this is new territory for us as a country, after nearly 800 years, and as an institution, should mean being open to innovative, ambitious and, yes, controversial ideas. And the tourism levy falls squarely within those criteria.

It’s also worth repeating that nothing has yet been decided. Rather, this is a debate about whether or not we should debate those issues. The tourism tax—and I will remind the Tories again—is but one of four shortlisted proposals that were whittled down from hundreds of suggestions submitted by various quarters of Welsh society. So, that’s where the ideas have come from. They’ve come from Welsh society—

Will you take an intervention?

Not now. I’ve only just started. You had your say earlier on.

And all four—a levy to fund social care, a packaging tax, a tax on vacant land and the tourism levy—do have huge potential for good, and they have pitfalls as well. That’s why this process is so compelling. Welsh Government has said it will test all four proposals before submitting one of them to the UK Government early next year. That, to me, seems entirely sensible. But, what makes no sense whatsoever is to say ‘no’ now; to close down the debate before it has even started, and that’s exactly what the Conservatives are trying to do. Did you want an intervention?

I’m grateful for you taking the intervention. Can I just ask: how many tourism businesses in your own constituency have you discussed this with? Because, at the end of the day, your economy will suffer a great deal as a result of a tourism tax, and I cannot understand why you think it’s a positive thing that we’re even discussing the possibility of a tax on tourism here in Wales, when there’s no such discussion—

I don’t want a speech; this is supposed to be an intervention.

[Continues.]—going on over the border in England, and we would face a lot of disadvantage as a result.

The point is—and you’ve done it again—you’ve closed down the debate; you don’t seem to understand the need to have a debate about this. I know full well how many tourist operators there are in my area, and I will make representations on behalf of those whom I have already replied to, who get in contact with me, without question. Because, if you had one inch of restraint, I was going to move on from the merits to the pitfalls.

One of the merits of a tourism levy and the proposal that has been put forward and mentioned by the Bevan Foundation is that it is a tax for good. There are examples—and some people have mentioned them here today—from around the world where it has been used very successfully: in parts of France, Catalonia, Slovenia, Berlin, San Francisco. They are hardly tourism backwaters. In San Francisco, I understand that it’s zonal, a bit like the London underground—so with a higher percentage charge the closer you stay to the city centre—and in Berlin it’s a flat rate. These are the details. What is perhaps more pertinent to today is what the impact has proved to be, good or bad. From the international examples, we know the tax is generally reinvested in tourism, on promoting the area and providing tourism-related services. That might include, as is the case in France, using the money raised to pay for the additional cost associated with large numbers of tourists, from infrastructure projects to cleaning up the beaches. The point is that it’s a tax paid by people who live outside an area to ease the financial burden on people hosting their stay.

After seven years of Tory cuts and the pot of money here being ever smaller, it is possible that raising local taxes can help ease the burden on the local taxpayer, who will have to pay for hosting individuals within their constituent parts. But there are also pitfalls, and we must scrutinise those very carefully. We do know, and I’ve said it and I’m fully aware of it, that Mid and West Wales does thrive on its tourism industry, directly and indirectly, and it is the lifeblood of those areas. So, whatever happens, whether we do have a levy or whether we don’t, what we absolutely must do is have a debate.

I’m grateful for this opportunity to speak against the introduction of a tourism tax in Wales. I do so because I believe a tourism tax would have a severe and adverse impact on the economy of my region. South-east Wales is a major destination for tourists from both the United Kingdom and from overseas. Six years ago, we put in this Chamber the Enterprise (Wales) Bill, and we emphasised very strongly to improve our tourism, and also, since 2010, the Ryder Cup, NATO, and also our football team and FIFA, have improved tremendously the visitors from abroad and the other side of the channel that come in.

Indeed, in 2014, south-east Wales was the second most popular destination for domestic overnight trips in Wales. Spend on these domestic overnight trips stood at £361 million a year. In 2014, there were also 441,000 international visits. Half of all international visits to Wales in 2012 to 2014 were made in South Wales East. Forty-seven per cent of all spend on international visits to Wales was spent in my region. Day visits are also popular there. There were 39 million day visits to Wales in 2014, accounting to over 40 per cent of all Wales day visits.

Deputy Presiding Officer, south-east Wales contains some of the poorest communities in the United Kingdom. Unemployment and deprivation remain stubbornly high. About one in 11 jobs in the region is accounted for by the tourism sector. I believe the tourism sector would be hard hit by the introduction of a tourism tax by this Government.

Just a few months ago, the UK Government announced that tolls on the Severn bridge between Wales and England will be scrapped by 2018. A study commissioned by the Welsh Government suggested that the removal of tolls would boost the Welsh economy by £100 million. No wonder Welsh businesses in the tourism sector have already expressed concern that a tourism tax could have a devastating effect on their industry and deter visitors from coming to Wales. That is without the knock-on effect on pubs, shops, cafes and visitor attractions in different areas, including our beautiful churches and beautiful scenery all over. They rely on this trade. It is also undermining a campaign by Visit Wales to promote Wales as a tourist destination.

But this is not the only Welsh Government strategy that will be hindered by this approval. ‘Our Valleys, Our Future’ is the Welsh Government strategy to deliver real change for the South Wales East Valleys. One of its priorities is to do more with the Valleys’ natural environment, its culture and heritage, so they can be more widely enjoyed by local people and those living further afield. It goes on to say:

The Valleys will be a recognised tourist destination, attracting visitors from across Wales, the UK and beyond.’

I ask the Welsh Government, in all honesty, whether a tourism tax will help or hinder the delivery of the aims of this strategy—all their strategies. A tourism tax was introduced in Ibiza and Majorca in 2016. I urge the Welsh Government to look at those consequences. Thomas Cook slammed its introduction, and the word is a ‘significant extra sum’ on family holidays. That would persuade many families, for holidays, to go somewhere else, not Wales. The Majorca Hoteliers Federation said the tax would lead to ‘millions in losses’ for the island’s economy. Wales cannot afford to increase the burden on our tourism industry and deter people from coming here. I hope Welsh Government will think again and again, and withdraw this damaging and potentially disastrous tax.

I think it’s about time that we should understand that, to increase our economy, there’s no point in increasing taxes. There are other areas that Government is looking at, of which four areas have been mentioned: water tax, sugar tax, land value tax, and there are other areas to look at, and I think, if you ask the public, they’d give you certain areas where tax can be raised, not on tourism. Thank you.

I’m delighted to support the Conservative motion today. I can also say that I can support the Government amendment to it, basically because it doesn’t really say anything. But it’s a good turnout that we have, at least on this side of the Chamber today. There is, of course, what we might call an aching void in front of us on my left, apart from the few distinguished sentinels of socialism who have come to watch the proceedings and report back.

The first thing I want to do is to rise to the challenge that Steffan Lewis threw out earlier on to Nick Ramsay about what’s our vision for Wales on devolved taxes. I’m very much in favour of devolved taxes, because it gives us the opportunity in Wales to add to our natural advantages, particularly in relation to the tourism industry. I strongly, therefore, support the Plaid Cymru call for differential rates of VAT. It gives us the opportunity to reduce the tax burden in Wales relative to our neighbours, and that, therefore, will perhaps help to correct the imbalance that has grown up over the years, and which has been very eloquently described many times in this Chamber by Adam Price, about the poverty of Wales compared to other parts of the United Kingdom and how we need to do something really dramatic to correct that. My motivating force in politics all my life has been the ancient Gladstonian principle of allowing money to fructify in the pockets of the people. So, I have always generally opposed the introduction of new taxes and called for a reduction in the existing tax burden. And I think we have to recognise the economic background against which any proposal to introduce new taxes in Wales would have to be measured. The IFS has recently produced figures to show that we are now, in Britain, facing the highest tax burden that we’ve had since 1986. There are £17 billion-worth of tax rises in train for the rest of this Parliament, and, if the Government sticks to its stated objective of wiping out the deficit by 2025, that means an extra £34 billion of taxes. I’ll give way, sure.

Just to ask you: who was in Government in 1986?

Well, indeed. We were, of course, clearing up the mess that was left to us in 1979. [Interruption.] Many Members in this Assembly, of course, are not old enough to remember those dark days of the 1970s, but there are some of us with long, long memories indeed. But this is an important debate because tourism is massively important to Wales, and as one of the Members for Mid and West Wales—of course, we have all the best bits of the tourist industry—then it means it’s of even greater importance to us.

It’s very useful, I think, to introduce some of the background statistics into this, against which any new proposal for a tax would have to be measured. Wales’s share of tourist visits to the UK is about 3 per cent, and, of those, 43 per cent visit Wales only. The average stay in Wales is six nights, and the average spend is £363 per person. That’s £61 per night on average and that is much less than the average spend in the UK, which is £100. Now, we don’t know at what rate any tourist tax would be imposed, but the Bevan Foundation has suggested £1. Well, £1 on £61 may not seem very much, but bearing in mind the facts that I mentioned earlier on in questions to the finance Secretary in relation to the price competitiveness of Britain in world markets—. I’ll repeat what I said earlier on, if I can find my glasses. Britain is almost bottom of the world league table in terms of price competitiveness: one hundred and thirty-fifth out of 136 countries. We at our peril make that situation even worse, and although it may not seem very much—£1 or £2 or whatever—it could be the straw that breaks the camel’s back for many people, and anything that makes Wales a less attractive place to visit in terms of value for money cannot be good for the tourist industry.

Yes, there are examples all around the world of the successful introduction of tourist taxes. Where they do tend to work is where demand on the part of tourists is pretty inelastic. Bath is currently, I believe, thinking about introducing some kind of a tourist tax. Well, getting around Bath in the tourist season is often very difficult. Venice is another case in point, or even New York or San Francisco, as mentioned by Joyce Watson earlier on. These are all international venues that have relatively inelastic demand for visits. Whether that would be so for Wales or all of Wales is a different matter altogether and, against the background of economic difficulty that we’ve lived and grappled with for many years, I do think that we’d be taking a very great risk indeed if we added further to the tax burden, which might tend to make it a less attractive place for foreigners in particular to visit.

Can I just remind Members of my declared interest in that my husband is the partner in a tourism business? Cabinet Secretary, I’m still hoping that this bed tax is something of an Aunt Sally and is included in the list of Welsh Government taxes being considered so you can be seen as a listening Government when you drop the idea. At the moment, it’s a little bit like threatening a child with spinach for breakfast because it’s good for them, and then claiming that you’re being merciful when you don’t carry out that threat. All this time, of course, that poor old child is regarding this threat as punishment for some unknown wrong that they don’t deserve, and that’s how the tourism sector is feeling at the moment.

Members of the tourism cross-party group, who were there at my invitation as chair, not because of Darren Millar’s exhortation, members who represent more—many, many more—than 305 people and represent all parts of the Welsh visitor economy, are very nervous about the fact that this is even being considered. English councils on the Welsh border are asking: will it be good for them, or will they be losing business because their marketing offer crosses the border? They’ve all seen world destination cities like Edinburgh and Bath, and even communities like Camden, pull back pretty swiftly when they recognised the wider implications and ask, ‘Why is Wales thinking of this?’ No-one wants to open the sluice gates to the UK charging bed tax when those beds are already more visibly expensive than their equivalents in other countries. And, yes, I know that VAT is a matter for the UK Government, and like you and MPs from all parties, including my own, we think that there is a strong argument for reducing VAT, but we cannot make that decision in this Chamber. What we can do here is agree not to impose further taxes on our tourists.

I just want to use my own example of why high VAT counters the point made by many that we are only talking about a few pounds and that no one will notice. Rome is a world destination, and people will definitely pay more to go there. You pay bed tax on top of your 10 per cent VAT but, not being widely advertised, it can come as something of a surprise to visitors. And it was a 12.5 per cent surprise for my family when we went in February, on a budget, to see the rugby. You do notice an extra €35 when you’re planning to spend just €280. Would it stop me going to Rome rather than London? I don’t think it would. Would it stop me going to Aberystwyth rather than Whitby? Well, you know, quite possibly. Let’s remember that, at the moment, the majority of visitors to Wales are from within the UK and are already facing the heaviest tax burden, generally, of our European counterparts. Of course, a budget for that holiday is a feature in anyone’s decision making, and we don’t want even modest bed taxes affecting those decisions and reversing very good trends for Welsh tourism at the moment.

I want to mention specifically Barcelona and why the tourism tax was introduced there. This is something that I discussed directly with the Catalan tourism agency and Barcelona tourism when I went to visit them not long after the tax was introduced. There were two reasons there. The first was that, in the wake of the crash, tourism was basically all they had left that was making money—all they had left to tax. The bed tax was introduced to assist the region’s economic recovery, with 25 per cent of those receipts going to health and education. The remaining money was destined for a tourism development fund, into which the sector itself directly paid extra money via its chambers of trade. That money was used to support a quality tourism offer, but it was also used to develop tourism in such a way that it was better balanced with the lived experience of residents.

That was the second reason: residents of the region were starting to object to the way that their standard of living was being affected by the economic collapse of sectors on one hand, and the way that their quality of life was being affected by the very high numbers of tourists in their space, pushing up the costs of goods and services. For that particular audience, the bed tax was held out as a deterrent and a way of balancing numbers. In any event, I think it’s probably worth mentioning that the majority of the Catalan Parliament did not support the introduction of the tax, and it only passed due to a considerable number of abstentions. Part of the reason for those was the issue that Ryanair was receiving huge subsidies to bring budget tourists to smaller airports in the region. I’m wondering if that kind of confused and contradictory support for the sector is what supporters of the tourism tax may have in mind. Thank you.

I am surprised that we are having this debate today because there was no mention of a tourism tax in Welsh Labour’s 2016 manifesto—a manifesto on which they were elected as the largest party to this Assembly. When there was a Labour Government also elected at UK level, there was a promise not to raise certain taxes, but this promise was broken and a raft of other stealth taxes was introduced when you came into office. Increases in national insurance and council tax became the norm. I do not want this past behaviour to be replicated or normalised in Wales. I appeal to the Welsh Labour Party and the Welsh Labour Government, therefore, not to prioritise the exploration of a tourism tax, but instead to concentrate on implementing the parts of their manifesto that encourage economic growth and the creation of well-paid jobs—these parts of the manifesto that are positive for Wales.

The tourist areas within my region, such as Gower and Porthcawl, try to promote the beautiful, unique country that we have, and I want to see the tourist industry in Wales flourish. The Welsh Government’s exercise on the tourism tax will continue to divert the resources of Government employees, special advisers and the like from implementing the manifesto priorities in order to explore a tax that is not a manifesto commitment. Consequently, I support the Conservative motion. It is my firmly held view that we should always strive for low taxation, giving individuals the opportunity to spend and invest in Wales. Now, it is possible to make a case for a tourism tax, but only in countries that already have a thriving tourist sector and low taxation levels applied to tourists. Such countries will prosper regardless of whether or not there is a tourism tax. This is because they have already engineered the best environment for tourists and businesses in the areas outside of any tourist tax. However, this is not the case in Wales. Wales, and the UK, is not a low-tax environment for anyone, and especially not for tourists. For approximately 20 years, the UK’s VAT rate for the hospitality and tourism sector has remained one of the highest in Europe—[Interruption.] Sorry? Did someone want an intervention?

Carry on.

Okay. According to a 2014 report by Geoff Ranson of the Cut Tourism VAT campaign group—specifically, he reports:

The UK is the highest in comparison with the other countries being nearly 3% higher than Germany and over 5.5% compared with Ireland which is the lowest of the comparator countries, who removed the airport tourist tax on 1 April 2014.’

Consider this report together with the British Hospitality Association’s statement made this year that European visitor numbers to the UK are already down due to the increased threat of terrorism. Any suggestion that you can improve Welsh tourism with a tax that may increase prices on tourists would seem far-fetched. According to the Welsh Government, in 2016, tourists spent around £14 million a day whilst in Wales, amounting to £5.1 billion a year, and Professor Annette Pritchard, director of the Welsh Centre for Tourism Research at Cardiff Metropolitan University, when speaking to BBC Wales’s ‘Week In Week Out’ programme, said about tourism in Wales, and I quote:

We are not doing as well internationally as our competitors, we’re getting about 3% of visitors and about 2% of spend.’

This contrasts to our having roughly 5 per cent of the population. So, this suggests that Wales is already underperforming on tourism. Wales has much to offer to those who wish to enjoy our splendid countryside and coastlines. Therefore, any tax that increases the cost of visiting Wales is likely to reduce tourism in an already underperforming sector that is situated in an overall high-tax environment. If we consider consumer spending habits, price and cost are usually, if not always, a factor as to whether someone makes a purchase, and tourism is no different in this. This vitally important industry must be protected, encouraged to grow, and encouraged to improve its performance. It should not be squeezed with any more tax.

Anthony Rosser, chair of the British Hospitality Association in Wales and manager of a hotel in Wales, said in a recent interview about any proposed tax,

It would be an utterly retrograde move. We…have very real worries over the recent cauldron of costs that have boiled over in the last 18 months, including increases in business rates…rising inflation and food and energy hikes. Increasing costs like this will…be handing an unfair advantage to our competitors’.

Finally, it might be said that the tourism tax could be set to a very low level, perhaps £1 a night. Indeed, the Bevan Foundation, which is not part of the Welsh Government, this made the suggestion in a recent blog post and other reports, and they said that such a levy could be capped by Welsh Government. My concern about this is that it leaves a door ajar that could be pushed wide open by Government.

Are you winding up?

Yes I am, thanks, Deputy Presiding Officer.

Our tourist industry must not be encumbered by a tourism tax, let alone an ever-increasing tax within a high-tax UK and Welsh environment. So, I hope that the considerations that I have put forward today, independently of the modelling of any Welsh Government economist, show that the Welsh tourism industry does not need the tax, does not want the tax, and deserves much better.

I call the Cabinet Secretary for Finance and Local Government, Mark Drakeford.

Diolch yn fawr, Diprwy Lywydd. I just wanted to begin by reminding Members why it is that we are having this debate at all. We are having it because the Wales Act 2014 provides the National Assembly with a power for the first time to propose new Wales-only taxes. The process is untried and untested, but I have always believed, since becoming finance Minister, that it’s a possibility that we ought to explore in order to see the potential that this power might bring to Wales. The question, Dirprwy Lywydd, is how to go about the process. We well know the tradition we inherit from Westminster. I’ve no doubt that, when I meet the Chief Secretary to the Treasury tomorrow, she will explain to me and my Scottish finance Minister colleague that budget secrecy and budget purdah means that there’s very little she can share with us. Indeed, UK Cabinet members will only hear of what’s going to be in the budget on the morning of 22 November. The results of this closed and secretive way of conducting business are often deeply unsatisfactory. The sugar tax, if newspaper reports are to be believed, the health Secretary of the UK Government heard about for the first time when he was listening to the Chancellor’s speech on the floor of the House of Commons. Certainly, in an area that is wholly devolved to Wales, Scotland and Northern Ireland, there were no prior discussions of any sort with any devolved administration in advance of that announcement. The result is that many, many months later the results of that announcement are still unclear.

The apprenticeship levy, sprung on industry and everyone else, has been even more pernicious in its effect. UK Government figures published earlier this month show that the number of people starting apprenticeships in England in May to July of this year has plunged by 61 per cent compared to the same period in the previous year. Taxation developed without debate and without proper engagement is inevitably vulnerable to unforeseen and unintended consequences, and it’s because of that deeply unsatisfactory history that we have tried to embark on our new fiscal possibilities in a very different way. We have published for all to see our tax principles and our tax work plans. In July of this year I published the approach we intend to take to the new powers to propose new Wales-only taxes. I said then that I would announce in my budget statement of 3 October the shortlist that had been drawn up for what I hoped would be serious and sober investigation during the autumn.

The reason that today’s debate is so disappointing is that it attempts to fly in the face of developing a new approach. Far from wanting to open up possibilities for Welsh citizens and Welsh policy making, the Conservative Party seeks only to close those possibilities down. Far from wanting an open exploration of the evidence in which anyone with an interest could make a contribution, they want to conclude a debate just as it has begun. Now, of course they are entitled to their view that a tourism tax is not something they would want to see taken forward in Wales, and if the motion on the order paper was for us to note the Conservative Party policy, there would be no objection to that. But that’s not what we’re asked to note. We are asked to agree that a view that one political party has come to should be imposed on the rest of us without a chance to have a debate of any proper sort.

Steffan Lewis was absolutely right in his original contribution when he said that what his party was in favour of was what Adam Price had said back in July: that there was merit in looking into the proposal. And that is the proposition that is in front of the Assembly at the moment. We simply say that a tourism tax is an idea that is worth having a proper exploration, and we say that because, as other Members here have already pointed out, it is an idea that is common in many parts of the globe, in cities that many of us will have visited: Paris, Brussels, Rome, New York, Berlin, Barcelona and so on, and in places that are the regular destinations of Welsh people taking holidays abroad. A tourism tax in France, in Majorca and in Portugal—

I’m grateful to you for taking the intervention. I’m wondering, in deciding on choosing the four, which included the tourism tax, for your list, how much evidence you’ve taken from those parts of the world that have decided not to proceed with a tourism tax.

In saying, Dirprwy Lywydd, that a tourism tax was an idea worth serious consideration, of course we looked at evidence from other parts of the world, and we saw then that tourism taxes operate in different ways and at different levels. We saw that they are almost always opposed by the industry itself, and indeed that the predictions of dire consequences regularly fail to materialise. I looked at what the head of the tourism organisation in Barcelona said when opposing the introduction of a tourism tax, just as visitor numbers to Barcelona rose more strongly than they ever had before. I looked at what the tourism organisation in Majorca said, just before the tax turned out to be so successful that they intend to use it even more next year.

I don’t say that the debate is in any way settled. I thought that Angela Burns’s speech this afternoon would have been a perfectly proper speech to make in a debate about whether a tax is a good idea or not. I thought the questions she raised were absolutely proper questions, the sort of questions that we would want to explore, that ought to be answered. Where I disagree with her and with her party is in believing that now is the moment at which you should try to shut all that debate down.

I normally listen very carefully to what the Member for Monmouth has to say. I think there’s only two points that I can take from his contribution this afternoon. He objected to the idea of a tourism tax on the grounds of fairness—this from a party that represents the bedroom tax in every part of Wales. Every Member on that bench is prepared to say to people who live in their constituencies that it is perfectly fair for them to pay £15 a week for a bed in their own home, but apparently it is utterly outrageous to suggest that someone coming to a wedding in Pembrokeshire might pay £1 a night to stay in Wales as part of that visit.

Instead, they will approach the newly liberated Severn bridge, slam the brakes on and say, ‘I was going to go to a wedding in Pembrokeshire, but I think now it’s going to cost me a £1 I’ll go to one in Hereford instead.’ I mean, it’s absurd. It’s absolutely absurd and they have to know that that is the case.

Not only, though, are they worried about fairness but they’re worried about the border. We know they’re worried about the border because Tories have always regarded that Wales’s chief advantage is that we come cheap. It was the whole basis of their whole economic policy in the 1980s—[Interruption.]

No—he is not taking interventions.

The whole basis of your economic policy throughout the 1980s was that Wales would have to earn its place in the world by being the cheapest place that you could possibly employ somebody, and they want our tourist industry to be the same. At least when Mr Hamilton gets up he treats us to his normal, weekly dystopian view of Wales as the new Singapore, somewhere where we’ll all be able to enjoy money fructifying in our pockets as we make our way to the workhouse.

Now, the purpose of the debate, Dirprwy Lywydd, and the purpose of the Welsh Government’s position is simply this: that we think that a tourism tax is an idea worth exploring. We agree with Plaid Cymru that a plastics tax is an idea worth exploring too. We will want to do that in a way that is sober and sensible, that we will explore some of the proper questions that people have raised this afternoon, and that we’ll do that by talking to stakeholders—we’ll give them an opportunity to contribute to our thinking and we’ll consider the evidence in proper detail. And when we’ve done that, and when we’ve done that with all the other possibilities that are in our prospectus, I will come back to the Assembly in the new year and let you know which of the four ideas we think is most likely to be able to test the new machinery that we have available to us.

We want to do it in a way that is open, that is engaged, that creates a different climate about tax policy here in Wales. I look forward to keeping the Assembly and the Finance Committee properly informed of our progress in doing business in that way.

Thank you very much, and I call on Russell George to reply to the debate.

Thank you, Deputy Presiding Officer. I’d like to thank those Members who took part in this debate this afternoon. In opening, my colleague Nick Ramsay comprehensively outlined why this ill-conceived proposal would be inappropriate for Wales, and, of course, the tourism industry would be significantly affected, as we’ve heard in contributions today from Members on this side of the Chamber. Now, as he and other colleagues—Angela Burns, Mohammad Asghar and Suzy Davies—have rightly said during the course of this debate, the introduction of a tourism tax would compromise the progress that has been made to boost Wales’s visitor economy and it will undermine business investment and employment opportunities in the tourism sector and put Wales at a disadvantage to other locations within the UK. There’s no doubt about that.

I have to say, Caroline Jones made a very fair contribution, pointing out, of course, that this tax was not in the Labour Party’s manifesto ahead of last year’s elections. Now, we can all agree on one thing this afternoon here: we can agree that the tourism sector does make a huge contribution to the Welsh economy. Figures from the Great Britain tourism survey demonstrate the great work that’s being undertook by the tourism sector in Wales with both visitor numbers and visitor spend showing significant improvement—something that we need to build upon and not jeopardise.

Now I come to Joyce Watson’s contribution. Of course, Joyce Watson says, ‘Nothing has been decided yet.’

Well, that is true. [Laughter.]

Well let’s have a look—. [Laughter.] Let’s have a look at what the First Minister says. So, the First Minister, talking about tourism tax said—. This is what the First Minister said, on 10 October:

We think that’s a way of sharing the burden. We think that’s a good way of ensuring more money is available for tourism.’

And responding to Darren Millar, he says:

I would have thought he would welcome anything that would ensure that visitors pay a little more to contribute to the local economy.’

Well, it looks like to me that the First Minister’s pretty wedded in his views. Joyce Watson also says we need a debate about this. Well, that’s what we’re doing this afternoon, Joyce Watson. Because what Joyce Watson needs to do is she needs to have a debate with her constituents across her region in mid and west Wales. As Neil Hamilton points out, many of those businesses in mid and west Wales depend on the tourism industry and the tourism trade. So, perhaps Joyce Watson can let me know how she gets on after she’s debated this issue with constituents in her own region. [Interruption.] No, no, no.

No, he’s not taking an intervention.

If she wants to—go on, then. Hurry up.

That’s very generous of you, thank you very much. The point is I will have a debate with people. What you’re actually doing is closing the debate down. Can’t you see that?

No, I can’t see that; we’re having this debate this afternoon, Joyce Watson.

Caroline Jones also pointed out the chair of the British Hospitality Association, who also happens to be the managing director of the Lake Vyrnwy Hotel and Spa, which is based in my own constituency, expressed his views that a tourism tax will hand an unfair advantage to our competitors in England, and this has, of course, been echoed by many others—the Wales Tourism Alliance and MWT Cymru, who have also said that the prospects of introducing a tourism tax will harm Wales’s competiveness and keep additional pressure on an industry that already pays VAT. Now, to those Members who have said that Wales should be not afraid of following the lead of other European countries, it should be remembered that most of those European countries that operate a tourism levy, with the exception of Slovakia, operate a reduced VAT rate on the main components of visitor expenditure.

Now, turning to Plaid Cymru’s contribution, it’s of course disappointing that they’ve amended our motion and totally ignored the main basis of our debate this afternoon, preferring to talk about a disposable plastic tax. And that’s worthy to be debated—I think there’s another debate in itself that could be talked about—but there wasn’t even the subject of our original motion. Now, in the draft budget debate, of course—I don’t want to misquote anyone here—Adam Price signalled his support for the tourism tax. This is what he said:

I think this is an idea that deserves to be explored.’

And he went on to say, talking about the tourism tax:

It’s called investing in the future of your country’.

Now, Steffan Lewis says—

I’m grateful to the Chair of the committee upon which I sit. I’ve written to him and pointed out that you’ve misrepresented me on a whole series of occasions. You’ve just read out the quote—what did it say? Explore: exactly what the Cabinet Secretary said, so stop making things up by saying that we support it. We’re saying we have open minds. Let’s look at the merits and demerits of every idea. The answer is in what I said, not what you said I said.

Deputy Presiding Officer, I’m going to agree with Steffan Lewis this afternoon. Steffan Lewis has said that a tourism tax would be an additional burden and not something that Plaid Cymru can support at this time. So, I agree with Steffan Lewis’s comments. Now, the Cabinet Secretary has commented this afternoon on our debate. What I would say is that one thing I am pleased the Cabinet Secretary has said is that he will make a decision in the new year: that I very much welcome, because I really believe that even the suggestion of a tourism tax is causing great damage to the industry. In fact, it’s already causing damage. It’s already causing damage. So, the sooner we can have a clear statement that this will be taken off the table the better. And I should say as well that when the Cabinet Secretary does make his decision, I very much hope that he will also say—[Interruption.] He will also say—

Can we listen?

[Continues.]—that this will be taken off the table for the rest of this Assembly term.

[Inaudible.]

Thank you, Presiding Officer. I’ve tried my best over the last minute to contribute to this debate, but I’ve been shouted down, but thank you, Presiding Officer.

Well, just carry on with it if you’ve got anything else to say. Or sit down.

When the Cabinet Secretary announces in the new year, I hope that this proposal will be dropped. What I would call on him to do is to ask him to ensure that this proposal is dropped for the rest of this Assembly term, because that’s the assurance that is needed by the tourism sector and businesses across Wales. Thank you, Deputy Presiding Officer.

Thank you very much. The proposal is to agree—[Interruption.] Can Members calm down and stop making sedentary comments when we’re actually moving on? The proposal is to agree the motion—[Assembly Members: Hear, hear.] The proposal is to agree the motion without amendment. Does any Member object? [Objection.] Thank you. Therefore, we will defer voting on this item until voting time.

Voting deferred until voting time.