A Member of the Senedd for Bangor Conwy Môn, Janet Finch-Saunders, has called for VAT on tourism and hospitality businesses to be reduced from 20% to 10%, arguing the sector is facing mounting financial pressures.

Tourism and hospitality support around 159,000 jobs across Wales, accounting for almost 12% of total employment. In parts of Bangor Conwy Môn, the industry employs up to one in five workers, making it a significant contributor to the local economy.

Speaking in the Senedd, Janet Finch-Saunders urged First Minister Rhun ap Iorwerth to work with the UK Government to introduce a reduced VAT rate for the sector.

VAT on hospitality and tourism is currently charged at 20%. During the Covid-19 pandemic, the rate was temporarily reduced to 5%, before increasing to 12.5% and eventually returning to 20% in April 2022.

Businesses across the sector have warned that they are now facing a combination of rising costs, including higher food and energy prices, increased business rates, minimum wage rises and higher employers’ National Insurance contributions introduced by the UK Labour Government.

In Wales, tourism operators have also expressed concerns about additional measures including the introduction of a visitor levy, often referred to as a “tourist tax”, and changes to self-catering holiday let rules, which require properties to be occupied for at least 182 days a year to qualify for business rates rather than council tax.

Janet Finch-Saunders said:

“Tourism and hospitality businesses were still recovering from the pandemic when they were hit by further challenges imposed by the then Welsh and UK Labour Governments, including the Visitor Levy, the 182-day threshold, rising costs, and increased taxes.

“The removal of the 40% Retail, Leisure and Hospitality Rates Relief on 1 April means the sector now faces an estimated £122 million increase in business rates bills over the next three years, according to UKHospitality.

“These additional costs are putting significant strain on businesses across Wales, which I have heard first-hand from constituents, and have seen historical hotels in Llandudno close their doors as a result.

“Without action, more businesses could close, with serious consequences for local economies and high streets.

“I am calling on the First Minister to work with the UK Government to reduce VAT to 10% and provide much-needed support for tourism and hospitality businesses. For the sector in Bangor Conwy Môn, this reduction cannot come soon enough.”

Industry bodies have repeatedly argued that a lower VAT rate would help businesses invest, protect jobs and remain competitive with other European destinations, many of which operate reduced VAT rates for hospitality and tourism services.

The Welsh Government has previously said its tourism policies are intended to support sustainable tourism while ensuring communities benefit from visitors, while the UK Government has defended its tax and National Insurance changes as part of wider measures to strengthen public finances.

Photo: Janet Finch-Saunders MS.