Edinburgh tourist tax: Bill allowing councils to introduce Visitor Levy passes first stage at Holyrood

Scottish Government says it will engage with tourism industry and councils on whether Visitor Levy should be percentage or flat rate

The Bill paving the way for Scottish councils to introduce a tourist tax has cleared its first stage in the Scottish Parliament.

MSPs voted to approve the Visitor Levy (Scotland) Bill by 86 votes to 30. Edinburgh is expected to be the first place in Scotland to bring in the tax on overnight accommodation once the law is passed.

But during the debate, public finance minister Tom Arthur made several concessions to the Holyrood committee which scrutinised the Bill and took evidence from interested parties including hoteliers, tourism operators and councils.

Edinburgh is expected to be the first place in Scotland to introduce a tourist tax once the legislation is passed. Picture: Lisa Ferguson.

Backing the general principles of the Bill, the Scottish Parliament’s local government committee said the levy had “the potential to bring significant benefits to visitors, the tourism sector and local residents”. But it highlighted divided views on whether the levy should be a percentage or a flat rate and also pointed to concerns about the types of accommodation the levy would apply to and raised the possibility of a potential exemption for young people.

Mr Arthur noted 21 out of 27 EU countries had some kind of visitor levy, as did many other places around the world, and said he believed it could be “a force for good”.

He said the Bill proposed the levy should be a percentage of the cost of accommodation. "We have chosen this model due to its simplicity and proportionality – it means the levy will reflect a visitor’s ability to pay and the type of accommodation. However we are aware of calls from the industry and some local authorities to change the basis of charge to a flat rate. The flat rate model has its own merits, such as ease of collection, but sacrifices the fairness inherent in the percentage rate.

"The committee report calls on the government to work with stakeholders to agree a way forward. I can confirm we will engage with local government and industry partners to consider this issue further.”

He said the government accepted the committee’s recommendation to remove moorings and berthings from the scope of the Visitor Levy. And ministers would remain open to options for capturing motor homes. The levy would currently be charged on motor homes parked on campsites, but not those elsewhere. Mr Arthur said there were issues with applying a levy to motor homes outside campsites, but he recognised the point made by the committee that there could be further technological solutions in future and would consider any developed proposals.

He said the committee had asked the government to consider whether national exemptions should be created for children and young people. “I’m happy to confirm that the Scottish Government will consider this suggestion further.”

But he rejected calls from some councils, including Edinburgh, to shorten the 18-month lead-in time for the levy laid down in the Bill. He said: “I appreciate the desire from those councils who have already undertaken work on a visitor levy to use this new power as soon as possible. However, I’m keenly aware of the strong support from the hospitality and tourism industry for the 18-month period as it gives businesses the necessary time to put in place measures to effectively collect the levy.”

He did, however, accept the argument put forward by Edinburgh and others that the Bill should be amended so the money raised could be invested in services or facilities used by visitors travelling for business purposes as well as those visiting for leisure purposes.

Lothian Tory MSP Miles Briggs claimed the tourist tax would damage an industry that had already suffered as a result of the pandemic. But he said: “If this legislation is passed, it is important that exemptions are allowed for, so that certain groups are not forced to pay additional charges. The Bill needs to have a defined set of national schemes made available.

"It would be unfair to capture some of the most vulnerable people in our society – people visiting children or family members in hospital or hospices; people visiting a family member in prison; business travellers, including actors and stage support staff; people staying in an area for working reasons.

“Scottish Conservatives want to see workable solutions embedded in the Bill and it is clear that across Europe exemption schemes are in place. In almost all schemes, children are exempt and many also provide a clear list of additional groups exempt from paying the tourist taxes – residents who reside in a local authority area; children and school and further education groups; and disabled people. In practically every country where a tourist levy is operation children under 18 are exempt and in Portugal an exemption is made for people under 23.”

Mr Briggs said the Conservatives would bring forward a number of amendments at the next stage of the BIll to provide exemptions.

Lothian Labour MSP Sarah Boyack welcomed the Bill, but said she hoped there would be careful scrutiny as it progressed through committee to make sure it worked to maximum advantage.

Edinburgh Northern & Leith SNP Ben Macpherson highlighted Leith Theatre and recobbling Victoria Street as two projects which should be considered for investment from the revenue raised by the tourist tax. And he added: “Waste services in Edinburgh come under significant pressure during the Festival period and it is right te council is arguing there should be consideration of whether the fee can be spent on that.”

Edinburgh Southern Labour MSP Daniel Johnson said the levy had to be “additive” and enhance the tourism offering. “It is important it is not just backfilling lost resource from other areas.” But he said there should be more attention to the impact on small businesses. “We should consider whether or not there should be an exemption for small businesses, because for some of these businesses it will not be worth their while continuing in business if they have to have this additional burden.”

What is the Edinburgh tourist tax? Who will pay and how much? All you need to know about visitor levy