Tommy Sheppard: Tourist tax scheme is and open and shut suitcase

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EDINBURGH should have a tourist tax. A small levy on the hotel bill for visitors would help pay the cost of keeping our magnificent capital city going.

The city attracts around four million visitors per year. In 2014, there were 5.8 million bed nights in Edinburgh hotels (2.3 million domestic tourists and 3.5 million overseas tourists). Even if these were in shared rooms we’re talking nearly three million hotel rooms a year (not including B&Bs). If there was an average £2 levy on the cost of a hotel room (a modest two per cent of a £100 room), that would bring in at least £6 million a year – and that’s probably a serious underestimate.

This isn’t going to solve the city’s financial problems overnight but it could make a significant contribution. Tourist taxes could be earmarked for leisure, arts and cultural activity –the very things that make our city attractive to visitors in the first place. And it would free up other funding and help avoid cuts in vital council services on which the city’s residents depend. Knowing this, I think most people would feel okay about making a small contribution to the city’s finances.

It’s not so much a question of fleecing tourists but a matter of fairness. It costs money to keep our streets clean, well-lit and safe. It costs to support our festivals, to keep our museums and public spaces world class. Residents pay for this through their council tax and yet many living outside the city centre don’t get a lot of benefit from it. Surely it’s only fair that people who come here for a few days or weeks and take advantage of these facilities make a modest contribution too.

I find the opposition from the big hotel chains to a bedroom levy a bit hypocritical. Some say it’ll push up bills and put visitors off. They don’t seem to have the same scruples when driving up hotel bills themselves at every opportunity. And because it would apply to everyone, it doesn’t put any one hotel at a competitive disadvantage.

Besides most of our big hotels are international chains, well used to charging local taxes in pretty much every other capital city in the world. Visitors to New York will see an 8.5 per cent local tax added to their bill, in San Francisco it’s twice that. I’d expect there should a minimum size of establishment which would have to charge the levy. I think small hotels and guest houses should be exempt, and as for Air B&B, let’s not even go there.

Someone, somewhere – probably a government minister – should sign off on the schemes individual councils might seek to bring in. This would ensure there’s a check on keeping the level of the tax reasonable.

It might even be possible to use the levy as a way to incentivise the hospitality industry to better achieve social and economic targets. Hotel staff, for instance, are notoriously poorly paid. Perhaps those that commit to bringing in the living wage – that’s the proper living wage of £8.20 an hour, not George Osborne’s rehash of the minimum wage – could get a differential rate or a waiver which would give them an advantage over their competitors who pay their staff less. True, this wouldn’t raise any money for services, but it would put more money in local workers’ pockets.

With the Scottish election looming, the time is right to press the political parties on this and I’ll be pushing this idea in the SNP. Of course, at the end of the day, local councils would decide. They wouldn’t be forced to do it and each local authority could do what’s best for their area. As the Americans say, what’s not to like?

• Tommy Sheppard is SNP MP for Edinburgh East