Andrew Landsburgh: Tourist tax will harm accommodation sector

Andrew Landsburgh, Founder and CEO, CODE Pod Hostel.
Andrew Landsburgh, Founder and CEO, CODE Pod Hostel.
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It has been reported that Edinburgh City Council is preparing to consult with the city’s tourist industry on plans to launch a tourist tax.

Whilst I agree that Edinburgh’s vibrant and enviable tourist market cannot and should not be taken for granted, there are plenty of tourism groups already in place who work together successfully to promote and manage the experience our visitors have in the city.

These are often funded primarily through the private sector with contributors giving up their free time in an industry famously known for its long hours. Why is this deemed insufficient?

Maybe I am pessimistic, but I and many others in the sector will need strong evidence to show where these tax contributions would go other than to try and solve a funding problem created elsewhere.

The proposed tourist tax comes rapidly in the wake of significant increases in business rates which have risen steadily with very little consultation.

The hospitality sector, and the accommodation industry in particular, have faced disproportionate increases in operating costs over the last few years, when compared to our counterparts in many neighbouring countries. In the UK, we pay 20 per cent of our revenue to HMRC in the form of VAT. To put this in context, Ireland pays nine per cent, Spain pays ten per cent and Portugal pays six per cent.

Is the proposed tax to be calculated as a percentage of accommodation rates, a flat fee or to be calculated through an alternative structure? A flat fee of £1 on a five-star hotel room of £300 is 0.33 per cent. The same fee, when applied to a £30 budget bed, equates to 3.33 per cent which is a very different proposition. Given the inability to track Airbnb properties, I would also question how confident we can be that everyone would contribute fairly to the tax.

In addition, the administration and cost of changing our software, file records and accounting systems to accommodate this tax all leads to unnecessary time and expense which could be better spent providing the best possible service and product for our guests.

Our particular business thrives on Edinburgh’s appeal to visitors from all over the world, offering them an affordable way to experience Scotland’s wonderful capital city. Further financial burdens brought by a tourist tax could threaten our ability to provide reasonably-priced accommodation for a vitally important and ever-growing segment of the tourist market.

Whilst there is a lot of work to be done to solve several issues that come from the increase of visitors to our beautiful city, a tourist tax is not the way to fix them.

Andrew Landsburgh is founder and CEO, CODE Pod Hostel