Visitors to Wales will have to pay up to an extra £1.25 a night to fund local services when a new ‘tourism tax’ comes into force.

The new Visitor Accommodation bill proposes giving local authorities the power to introduce a visitor levy - a small charge paid by people staying overnight in visitor accommodation.

The bill - introduced in the Senedd on Monday, 25 November - “will raise additional funds for local authorities to support the long-term sustainability of our tourism industry,” the Welsh Government said.

Confirming the introduction of the new Bill, Finance Secretary Mark Drakeford said the levy would be set at 75p per person per night for people staying in hostels and on campsite pitches, and at £1.25 per person per night for those staying in all other accommodation types.

The tax will also apply to people from Wales staying the night in visitor accommodation and will also apply to children.

This would mean that a family of four holidaying for a week in Wales would face a tax bill of £35.

The levy will not apply to people who are staying in Wales longer than 31 days, who are staying at an individual’s main residence or those staying for emergency or temporary housing.

The policy was part of the co-operation deal signed between Labour and Plaid Cymru in 2021.

The plan will also include instigating a national register of all those providing visitor accommodation in Wales to make sure the levy can be collected.

Local authorities will decide if they want to introduce a levy in their area, based on what is best for their communities.

It is estimated the earliest this could happen is 2027 after a local authority has consulted their community.

Local authorities that rely heavily on tourism such as Gwynedd, Ceredigion and Pembrokeshire are likely to take up the chance of bringing in additional revenue as all three face incredibly tight budgets and residents have seen council tax bills increase dramatically year on year.

In September, Duncan Hall, Ceredigion County Council’s Corporate Lead Officer for Finance and Procurement told a meeting that the county would “benefit” from such a levy.

Finance Secretary Mark Drakeford said: “This Bill is rooted in the principle of fairness. We know tourism makes an important contribution to the Welsh economy and to Welsh life. We want to ensure its long-term sustainability.

“That’s why we believe it is fair visitors contribute towards local facilities, helping to fund infrastructure and services integral to their experience. Visitor levies are common around the world, benefiting local communities, tourists and businesses – and we want the same for Wales.

“Money raised through a levy would be retained by local authorities and re-invested back into their local areas to support local, sustainable tourism. It’s a small contribution that could make a big difference.”

During Senedd sessions earlier this year, opposition members warned that the tax could “make people think twice” about holidaying in Wales, which would have a “significant impact on tourism and hospitality businesses.”

Councillor Andrew Morgan OBE, Welsh Local Government Association Leader, said: "This Bill will give councils the option to introduce a visitor levy on overnight stays. It’s a way to raise extra funds to support local services and improve amenities that benefit both visitors and the community.

“Each council will decide how to apply the levy based on what’s best for their area, recognising that it may be suitable in some parts of Wales but not in others. Councils will carefully consider local circumstances and ensure residents are consulted before any decisions are made.

“We’re glad to have worked closely with the Welsh Government on this and look forward to seeing the draft legislation in the coming weeks, which will mark an important step forward for Wales' tourism and local economies.”

However, industry leaders have voiced concern over the proposal and what the money will be used for.

The Welsh Tourism Alliance has said it is disappointed with the details laid out in Monday's announcement to introduce a tourist tax in Wales.

Chair of the Wales Tourism Alliance, Llanrhystud businessman, Rowland Rees-Evans, said in response: "The tourism and hospitality industry contributes billions of pounds annually to the Welsh economy and employs over 11 per cent of the working population and the Wales Tourism Alliance does not believe that a Visitor Levy is the right solution for Wales.

"However, since it became clear that a Visitor Levy is a preferred policy for the Welsh Government. we have put a huge amount of work in to ensure that any proposals would both recognise the importance of tourism to Wales and be fit for purpose.

"We are disappointed that a number of the key points on which we felt we had reached an understanding with the Welsh Government have not been adequately reflected in the proposed policy.

"In particular we feel that the Welsh Government has missed a key opportunity to establish a registration scheme for self-catering accommodation that would have incorporated key health and safety criteria and assured visitors that their accommodation meets basic assurance standards.

"What has been proposed will instead increase the costs for tourism and hospitality businesses, which will be passed on to our visitors, without any perceived 'added value'.

"We are also disappointed that there is no clear commitment that the funding raised by the levy will be dedicated to improving the visitor experience in Wales. We had emphasised the need for tourism and hospitality businesses and representative bodies to be involved with the decision making process on how the levy would be spent, but see no commitment to this.

"This was the Welsh Government’s opportunity to deliver a gold standard in tourism and accommodation – setting Wales apart from the rest of the UK. Instead it has merely made Wales more expensive without any perceived added-value for our visitors."

William McNamara, Chief Executive of Bluestone National Park Resort in Pembrokeshire, added: “While we have slightly more clarity on the proposed visitor levy, including the £1.25 overnight charge, there remain concerns about its potential impact on the tourism sector. Wales risks becoming less attractive to visitors, especially families, who may view this as an additional cost in an already competitive UK market – particularly as this levy is not being introduced in England. The flexibility for councils to raise charges in the future also adds an element of uncertainty that must be carefully managed.

“At Bluestone, we are proud to offer sustainable, luxury breaks that celebrate Wales’ unique heritage and natural beauty. We recognise the need to invest in local infrastructure and services, but it is crucial that this levy is implemented thoughtfully and transparently to support both visitors and businesses – especially for those already navigating economic challenges.

“Tourism is the backbone of communities like Pembrokeshire, and reinvestment in rural areas can undoubtedly bring benefits. However, the success of this levy will depend on clear accountability for how funds are used and a commitment to ensuring Wales remains a welcoming and competitive destination for all.”

The Conservatives have also criticised the plans.

Peter Fox MS, Shadow Minister for Finance and Local Government, said: “This tax is the wrong one for Wales and the wrong one for our tourism industry.

“Not only will it impose huge amounts of red tape on small businesses and add significant costs to family holidays, it will also work against its own aims by driving visitors to using more council-maintained facilities.

“We should be nurturing our tourism sector, not hammering it with new taxes.”

Montgomeryshire MS, Russell George, added: ‘’This tax is the wrong one for Wales and the wrong one for our tourism industry.

“Not only will it impose huge amounts of red tape on small businesses and add significant costs to family holidays, but it will also work against its own aims by driving visitors to using more council-maintained facilities.

‘’Here in Mid Wales, our local businesses will feel the hit more than most.

‘’Rather than imposing additional costs on visitors, we should focus on attracting more people to discover what Mid Wales has to offer, boosting investment in the region and supporting local jobs. This tax could have unintended consequences, putting livelihoods and the future of our tourism industry at risk."

Tourism taxes are common practice in various parts of Europe, including Germany, Greece and Spain.

Manchester was the first in the UK to introduce levy. A City Visitor Charge of £1 person per night was introduced in April 2023. It is charged by 73 hotels in the city centre and raised £2.8m in its first year to support new events.

Visitors to Manchester can however choose not to pay the levy.

The Scottish Government has consulted on its plans for a Visitor Levy (Scotland) Act, which would introduce a levy based on a percentage of the accommodation cost, with each rate left to individual councils. Edinburgh is on track to introduce a five per cent levy on rooms in 2026.

Bath, Liverpool, Edinburgh, Birmingham and London have all explored the idea of introducing a tourism tax.

In a paper released by the Welsh Government in 2023 on the proposals, it said: “Visitor levies are common across the world and more tourist destinations, including in the UK, are introducing them to help fund the public services and infrastructure that are integral to the visitor experience.

“There is limited evidence to suggest visitor levies have a negative economic impact.

“Many of us will have paid a levy while abroad without noticing.

“Destinations such as Majorca, Amsterdam, Marseille, and Malta use funds from their levies to support a healthy visitor economy for everyone, protecting the infrastructure and services on which visitors depend.

“If the Senedd approves the legislation, it will then be for each local authority to decide if it wishes to start the process to introduce a levy.

“We plan to develop legislation and introduce it to the Senedd within this government term.

“A local authority would need to consult with its communities to inform its decision about implementing a levy.

“Once a local authority makes a decision to introduce a levy, there will be a notice period to ensure businesses and visitors are prepared.

“Through the above process, we estimate that the earliest a visitor levy will be in place in any part of Wales is 2027. The visitor levy would put power into the hands of local communities and give them a tool to encourage sustainable, regenerative tourism.”

However, other areas of England have rejected proposals for a tourism tax.

Cambridge hoteliers were balloted earlier this year on plans to introduce a £2 levy, which they rejected 16-6.

European cities such as Madrid have also rejected a tourist tax.

Welsh Language group, Cymdeithas yr Iaith has welcomed the proposal.

Dr Jeff Smith said: “We welcome the proposals to introduce a tourism tax announced today as part of the solution to mitigate the harmful effects of tourism on our communities.

“Tourism in its current form is an extractive, uncertain and seasonal industry, which can erode the sustainability of our communities and our language.

“These communities - often some of the poorest in Europe - face serious challenges from unsustainable tourism, such as housing unaffordability, lack of access to public services and short-term, low-paid employment.

“The money collected by this new tax should be earmarked by local authorities for reversing this damage and increasing the resilience of our communities, for example by investing in social housing for local people or maintaining community resources like those developed as part of Menter Bro Ffestiniog which would benefit the industry and the community as a whole.

“We also call for the tax to come hand in hand with comprehensive and proactive plans by the Welsh Government to create a tourism industry that is sustainable and benefits local communities and economies, as we have seen across Europe.”

There will be other exemptions in the levy such as people who receive a tax bill for an overnight stay due to an emergency can seek a refund and disabled people who paid additional levy costs when accompanied by a carer will be entitled to a refund.