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Tourism sector ‘to benefit’ from new visitor levy

Katie Hagmann and Tom Arthur
Katie Hagmann and Tom Arthur at Dynamic Earth for today’s launch (pic: Terry Murden)

Councils have been assured that they would retain all the revenue raised from a tourist tax for re-investment into projects supporting the sector.

Public Finance Minister Tom Arthur today confirmed that the objective of the Visiter Levy (Scotland) Bill is to empower local government and that the amount raised would not influence future budget agreements between councils and Holyrood.

It was also confirmed that the proposed legislation will give councils the power to apply a levy on stays in overnight accommodation based on a percentage of the accommodation cost, rather than a flat rate. No ceiling has been announced.

All money raised would have to be reinvested locally on facilities and services substantially for or used by visitors, enhancing the tourist experience and benefiting local communities and their economies.

Mr Arthur said today that if the bill is passed it is likely that the first levies will begin operating in early 2026.

Edinburgh has been campaigning for a tourist tax for five years. Its research showed that 85% of 2,500 respondents strongly supported the introduction of a levy. This figure included a majority of Edinburgh-based businesses and accommodation providers.

It was estimated at the time of the research that a levy in Edinburgh could raise in the region of £15m per year to invest in sustainable tourism and managing the impact of tourism on the city.

Council leader Cammy Day has spoken of a levy of “a few pounds”, probably less than a cup of coffee.

Speaking today at a launch event held at Dynamic Earth in Edinburgh, Mr Arthur said the new power “creates wide scope to support the visitor economy” and rejected claims that it would damage business and deter visitors.

“It is a first for Scotland, but there are many across the world. They have not had a negative impact on tourism,” he said.

“Levies on visitors staying in paid-for accommodation are already used around the world and it is reasonable for local areas to want a small contribution from tourists to help support and sustain visitor economies.”

Taxes on overnight tourist stays are common across Europe and in other locations around the world, with 21 out of the 27 EU member states charging occupancy taxes. Some cities and regions (such as Berlin) use the levy as a way to increase general revenues while others (such as Nice and the Balearic Islands) ring-fence all or part of the revenues to fund specific projects.

Confirming that Holyrood would not take a cut of revenue raised, Mr Arthur added: “This will not impact on financing local government.”

Under the plans, councils would be required to consult communities, businesses and tourism organisations before putting a visitor levy in place. They would also have to consult on how any revenue raised should be spent. Questions have been asked as to whether this includes road repairs and litter collection as these also impact on the visitor experience. Mr Arthur said it was for councils to make these decisions.

The proposals follow public consultation and form part of the New Deal for Local Government aimed at giving councils greater financial flexibility and strengthens local democracy.

The Scottish Government has also invited representatives from the tourism industry, COSLA and other partners to join an expert group to consider how it could best be implemented if passed.

COSLA resources spokesperson Councillor Katie Hagmann from Dumfries and Galloway said: “This represents a key step towards reaching COSLA’s long-standing goal of a more empowered Scottish local government.

“COSLA has consistently called for the ability of councils to set and raise taxes based on what is needed and decided locally. By providing each local authority with the power to set a rate charged to visitors, and to do so independently of the Scottish Government, the Local Visitor Levy empowers local decision-making, with councils able to respond to the needs of their area and the people who live there.

“We welcome the flexibility offered by this legislation, and will consider if there are opportunities for it to go further. We are looking forward to seeing further investment both in tourism and our communities in the future.”

Marc Crothall, chief executive of the Scottish Tourism Alliance (STA), offered broad support for the proposals.

“We have accepted that this is a policy which will be implemented within the next three years and are pleased that the Scottish Government has adopted the key recommendations which have been put forward formally by the tourism and hospitality industry.

“The STA welcomes the fact that the Bill supports our ask that revenue raised from a Visitor Levy must be spent on enhancing Scotland’s tourism economy.”

Background

The Visitor Levy (Scotland) Bill

The Bill, if passed, will give a local authority the power to introduce a visitor levy in its area, if it wished to do so. The levy would be a percentage of the overnight accommodation cost with the rate set by the local council.

Councils would be able to apply a visitor levy in all or parts of their area. The levy would be collected by the accommodation providers and remitted to the relevant local authority on a regular basis (the default being quarterly).

It applies to almost all types of overnight accommodation within the area where a visitor levy is being applied, including hotels, self-catering accommodation, and campsites.

Analysis of responses to the Scottish Government’s consultation on the principles of a local visitor levy.

The expert advisory group, facilitated by VisitScotland, will bring together tourism industry bodes and local government to discuss how best any visitor levy can be implemented and to develop national guidance for local authorities.

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