Capital wakes up business scheme to replace bed tax

Tom Buchanan
Tom Buchanan
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Plans to raise millions of pounds from businesses across the Capital to fund promotional work are being drawn up as an alternative to a controversial tax on visitors.

City promotional body Marketing Edinburgh and the city council are working up proposals to add an extra “levy” to the annual business rates bill of all companies with a “rateable value” above £50,000.

Colin Paton

Colin Paton

The money generated –which could total several million pounds a year – would then be earmarked for funding the promotion and economic development of the city.

Bosses at Edinburgh Airport, which already faces an annual business rates bill of £4.5 million, have said they would be willing to pay their way as part of the scheme.

The project would be an alternative to a hotel “bed tax”, where visitors to the city would be charged an extra £1 or £2 per night, which city leaders confirmed this week that they “agree in principle” with.

The bed tax plan is expected to fail because the council would need changes to Scottish Government legislation in order to introduce it, while there are no such concerns about a city-wide “business improvement district” (BID).

A full report on options for raising new funding, including the BID and bed tax, is to be produced for councillors in January. Councillor Tom Buchanan, the city’s economic development leader, said: “The report will go through the transient visitor levy proposal and detail if it needs legislation from the Scottish Government to go through.”

He said that it will also look closely at the option of a city-wide BID, either for businesses within the leisure sector or the whole business community, and detail how much must be raised to improve the city’s marketing message.

Hoteliers had criticised the bed tax proposal for being aimed at hotels only.

Colin Paton, chairman of the Edinburgh Hotels Association, said: “There are two different prizes sought here. The city wants to fill its black hole, while hoteliers are interested seeing money judiciously spent on identified purposes.”

Initial estimates suggest a bed tax could bring in around £5m a year, while hospitality leaders suggest a city-wide BID could bring in significantly more.