Council leaders and businesses clash over Edinburgh tourist tax

SOME see it as an easy new tax to levy, with the potential to raise millions for much-needed investment in the Capital. Others insist it risks deterring visitors from coming to Edinburgh and could damage the city's success.

Wednesday, 30th May 2018, 8:10 am
Updated Wednesday, 30th May 2018, 8:16 am

The debate about a tourist tax is hotting up and council chiefs are stepping up their efforts to secure the powers to introduce what they prefer to call a Transient Visitor Levy (TVL).

Many cities across Europe and the world already have such a tax in one form or another and the council is drawing on their experience to help shape how it might work here.

The debate over a tourist tax in Edinburgh is heating up
The debate over a tourist tax in Edinburgh is heating up

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So what are the prospects, practicalities and problems of a tourist tax for Edinburgh?

One tourism industry insider believes it would be popular with city residents – because they would not be asked to pay it.

“Residents see their council tax go up to pay for services and they also an increased number of tourists in the streets – and now they are waking up to the fact that tourists don’t contribute.”

Research commissioned by the council, due to be discussed tomorrow, estimates revenue from a tourist tax could be anything from £4.9m to £29.1m a year, depending on how it was levied.

But hotel operators say the Capital’s successful tourism sector should not be treated as a “dripping roast”.

“I disagree totally with the tourist tax,” says Russell Imrie, spokesman for Edinburgh Hotels Association.

“We’re already the highest taxed visitor destination in Europe. Customers pay 20 per cent VAT on their hotel stay in Edinburgh – most European countries have a VAT rate for hotels and restaurants which is below their top-line rate.

“I think it’s madness to charge the customer additional tax and make us even more expensive than we already are.

“The tourist industry is very successful in attracting people from all over the world. It creates employment opportunities and adds economic value to the city. We should not be trying to impose greater costs on visitors.”

He says a tourist tax would be an extra burden on customers, including British families taking short breaks.

And he dismisses the claims that an extra £1 or £2 would go unnoticed on hotel bills running to hundreds of pounds.

“I believe the customer does notice. Nobody has said what they are proposing – £1, £2, is it per person, per room?

“It all quickly adds up and then instead of £1 or £2 it’s very quickly £10 or £15.

“A customer looks at the total cost of their trip, whether it’s business or leisure, and taxation is just one element – you have the cost of flying and then Air Passenger Duty, which is the highest in Europe, and there’s the issue of the exchange rate.

“We should be asking how we can reduce taxation and make the costs more cost-effective for visitors.”

John Donnelly, chief executive of Marketing Edinburgh, is not taking sides in the debate – but he wants any decision to be well-informed.

“Our view is until some proper research is done, everything else is just opinion,” he says.

“You get organisations like the British Hospitality Association saying it would be the end of tourism if a levy was introduced. We don’t know that, they can’t predict that with any certainty.

“The only research done was 2007 when 1000 visitors were interviewed on the street by Scottish Enterprise and asked ‘Would you pay a two euro supplement?’ and 83 per cent said no problem whatsoever on the proviso it was for promotion of the city, events such as festivals and cultural infrastructure.”

City heritage watchdog the Cockburn Association says 77 per cent of tourists come to Edinburgh for its historic townscape. And they believe a tourist tax should be ring-fenced for local heritage and environment projects.

Cockburn chairman Cliff Hague says: “Maintenance of buildings and public spaces has suffered during the long period of austerity. We need to look after the assets that sustain Scotland’s tourism industry, so why not use a tourist tax to conserve buildings and green spaces?”

The council’s research says the UK is one of only nine countries in the EU where cities do not charge a tourist tax.

It claims that in Germany, Austria, Switzerland, the Netherlands and Greece, and also in Paris, visitors often do not realise they are paying a tax because it is usually incorporated into their accommodation price and paid at the time of booking. Elsewhere, including Italy, Spain and in Central and Eastern Europe, the charge is payable by cash when checking out.

And the report notes the tax can include a variety of options such as off-season discounts, exclusions for children and limiting the tax to the first few days of a longer holiday.

Venice and Dubrovnik both set different rates of tax for high and low seasons. Lisbon and Florence have capped the charge at seven nights, while Venice and Verona charge the levy for the first four nights only.

The tax could be charged per room or per person or as a percentage of the bill. But the report points out a charge per room is more straightforward than a charge per person, since hotels or B&Bs would not have to collect details on all visitors who stay.

Council leader Adam McVey says the authority is consulting with the tourism sector on the report.

“The feedback we are getting is not one of massive opposition but quite constructive engagement. I think there area lot of organisations and individuals who see this coming down the line and are trying to influence things to make sure the tourist levy we go for is right for the city.”

Cllr McVey emphasises the proposed levy is not a tax on business but “a small contribution by tourists towards the services they use during their stay with us”.

But before a tourism tax can be introduced, the Scottish Parliament needs to approve legislation allowing it. So far, Scottish Government ministers have shown little enthusiasm for the idea.

Cllr McVey says: “I have been engaging regularly on the subject directly with ministers and I think they are being constructive. They have a long-standing position and the council has a long-standing position. We need to have a way of reconciling these, but I’m quite optimistic.”