Tourist tax: Midlothian won't follow Edinburgh lead as report warns visitor levy may cost more than it raises

Midlothian Council agrees to hold off on tourist tax as county would have lowest revenue in South East Scotland

A tourist tax could cost Midlothian Council more to operate than it will bring in each year, a new report has revealed.

The visitor levy, which could see people charged £2 for every overnight stay, is being considered by local authorities in the South East region with Edinburgh city council leading the way. However a report to Midlothian councillors said while Edinburgh could be looking at revenue of up to £14 million from an annual charge, Midlothian Council is likely to bring in around £180,000.

And it warned administration costs to operate the tax could cost between £190,000 to £500,000 a year. Officers told councillors that currently Midlothian is not at “visitor capacity”. It said the county currently has an opportunity to benefit from neighbouring Edinburgh city council’s policy of refusing licences for short-term lets in tenement properties, and should “realise an opportunity to increase accommodation demand and provision in Midlothian”.

Midlothian Council headquarters - councillors have agreed to hold off on a tourist tax for now.

But it warned introducing a visitor levy on its own would cost more than it would bring in, saying: “Major tourist hubs such as Edinburgh attract high volumes of visitors annually, drawn by multiple factors including rich history and cultural attractions. The implementation of a Visitor Levy in these areas can yield substantial revenue for needed infrastructure improvements.

"However, Midlothian experiences a significantly lower volume of overnight stays, the revenue generated from a Visitor Levy in Midlothian would be considerably lower and may not sufficiently justify the associated administrative costs.”

Officers said neighbouring councils had discussed introducing a region-wide levy system which would share the costs and burdens increasing the chance of everyone making a profit. However they said Edinburgh city council was not keen on the regional model.

Figures for the councils in the South East Scotland region showed Midlothian stood to make the lowest potential revenue from a levy at £196,000 annually, followed by West Lothian who could bring in £285,000.

Edinburgh in contrast could expect over £14 million followed by Fife making £3.85 million, Scottish Borders £2.5 million and East Lothian just over £1 million a year.

Midlothian councillors agreed to keep a watching brief on Edinburgh’s progress with the visitor levy before making a decision on its value in the county. They also agreed to a consultation being launched by their economic development team with local tourism and hospitality in the future when the ability to introduce a levy becomes law next year.

Ian Gardner, chair of Midlothian Tourism Forum, welcomed the approach by the council. He said: “I welcome this decision by councillors to take a considered approach to any potential visitor levy and to commit to further consultation on the issue in due course.

”Midlothian Tourism Forum will support our members to participate in the local consultation to ensure that the impacts and implications of a proposed levy are fully taken into account before final decisions are taken.”