What is the Edinburgh tourist tax? Who will pay and how much? All you need to know about visitor levy
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Edinburgh could become the first council in the UK to introduce a tourist tax. Legislation was unveiled last week by the Scottish Government – the Visitor Levy (Scotland) Bill – setting out how councils could operate such a tax and paving the way for the Capital to bring in extra revenue to help meet the city’s growing expenditure. So what does it all involve? How much will the new tax be? Who will have to pay? And what will the money be used for?
Here’s everything you need to know.
What is the Edinburgh tourist tax?
Edinburgh council has been campaigning for years for the power to introduce a levy on visitors because the large number of tourists who come to the Capital inevitably means extra expenditure – keeping the streets clean, emptying litter bins, making sure the city remains attractive, providing good transport links, maintaining the roads and so on.
The Scottish Government has now introduced legislation at Holyrood which will allow councils to bring in a visitor levy on overnight accommodation in their area if they wish.
What will happen in Edinburgh?
The council has made it clear it wants to introduce a levy in the Capital. And in anticipation, it agreed plans for a charge of £2 per person per night, capped at seven nights. It was estimated such a levy could raise between £5 million and £35 million a year, depending on the final model.
But the plans will have to be rethought because the Scottish Government legislation says the levy must be set as a percentage of the overnight accommodation bill, not a flat-rate charge. Council leader Cammy Day has welcomed the change, saying it is fairer if people staying in a five-star hotel and guests in a B&B pay the same percentage rather than the same amount. And he says he thinks between two and four per cent seems a reasonable rate to set.
Who will pay the Edinburgh tourist tax?
The levy will be charged on overnight accommodation, including stays in hotels, hostels, guest houses, bed and breakfast accommodation, self catering accommodation, campsites and caravan parks. It will not apply to gypsy and traveller sites. And the government says a cabin on a ferry or a sleeper train, or the hiring of a campervan, will not typically be subject to a levy. But overnight parking of a campervan at a ampsite or the overnight mooring of a boat at a boat mooring would be subject to a levy.
Accommodation providers will be responsible for collecting the levy from visitors and remitting it to the council on a regular basis.
What will the Edinburgh tourist tax money be used for?
There was some concern about how restrictive the legislation might be on how councils could spend the revenue. But during the SNP leadership campaign, Humza Yousaf told the Evening News: “I think it would be wise to allow local authorities as much flexibility in relation to that spend. I'm in favour of allowing local authorities to decide how that money should be spent.” Edinburgh has indicated its priorities are waste, cleansing and improvements to public areas and greenspaces.
The proposed legislation says the revenue should be reinvested locally in "developing, supporting or sustaining facilities and services which are substantially for or used by" visitors. Launching the Bill, public finance minister Tom Arthur said the investment should support the visitor economy, but there was "flexibility" over precisely how the money was used in recognition of different priorities in different parts of the country.
However, Cammy Day has said he believes the scope set out for using the revenue should be “a bit wider” to ensure the whole city benefits. Although councils will have to make sure their spending plans are consistent with the legislation, their proposals do not have to go to ministers for approval.
Could an Edinburgh tourist tax deter visitors?
In 2018, an open letter to the council from organisations including Radisson Hotels, Best Western Hotels, UK Hospitality, the Scottish Licensed Trade Association and the Scottish Bed and Breakfast Association warned any tourist tax would "inevitably lead to fewer visitors and lower spending, affecting jobs and investment". They claimed a tourist tax could cost the city's economy £45m.
But supporters argue that many other cities in Europe and around the world operate a tourist tax without it affecting their visitor numbers. Humza Yousaf told the Evening News: "I’ve been to many European cities where you pay a few extra euros and it's not a disincentive to going to those places, so I don’t accept that argument people use against it."
Surveys of visitors to the city, conducted at the height of summer and in the quieter month of October, found 88 per cent of peak period tourists and 80 per cent of off-peak visitors would still come to Edinburgh if a levy were introduced.
Is there a limit to the Edinburgh tourist tax the council can charge?
Each council which decides to introduce a visitor levy will set its own rate and the legislation does not include any maximum. Different rates can be set for different areas within the council's boundaries and the explanatory notes to the Bill say a council could also, for example, set different rates for particular events, such as arts festivals or special conferences. However, different rates may not be set for different types of accommodation.
Edinburgh could therefore decide to charge a higher visitor levy during the Festival, but council leader Cammy Day says there are “no particular plans” to do so.
Is it a tax or a levy?
Although it is commonly referred to as the "tourist tax", the extra charge on on the cost of overnight accommodation will officially be known as the Visitor Levy (VL). It makes more sense than the name which the Scottish Government used for a while, the Transient Visitor Levy (TVL) – critics pointed out that visitors were by definition transient. And when Nicola Sturgeon promised legislation on the new tax in her last programme for government, she called it the Local Visitor Levy (LVL). But in the end, officials have decided to keep it simple and make it VL.
When will the Edinburgh tourist tax happen?
A tourist tax has been talked about for so long, it feels like all the arguments have been had. But the proposed legislation will have to go through the parliamentary process and be passed by MSPs. Then any council wanting to introduce a visitor levy will have to draw up a scheme and consult with businesses and the wider community. And there will also have to be a lead-in time so both councils and businesses can prepare.
The earliest the government expects a levy to be introduced is the first half of 2026 – although Cammy Day says he hopes that timetable can be accelerated. He thinks local authorities and the tourism industry will both press for a speedier introduction of the levy. He says: "The industry in Edinburgh accept it's coming in and want to work with us to make sure it's delivered as soon as possible and make sure it benefits the industry and the wider city as much as possible."