Scottish councils told they will not get tourist tax powers until at least 2021
Councils will not be allowed to impose a tax on tourists until 2021 at the earliest - as the Scottish Government raised new concerns about the industry's "fragile" state.
Tourism secretary Fiona Hyslop has admitted it was forced to agreed to bring in legislation against to get its budget through Holyrood in January.
But, addressing the Scottish Tourism Alliance conference in Glasgow, she cited “very important and complex issues and concerns” that had been raised by industry leaders.
Ms Hyslop said the “unprecedented challenge” of Brexit and concerns over its impact on freedom of movement meant that said it was more important than ever to “ensure the world knows Scotland is open and welcoming.”
Warning against complacency over the industry’s strength, she insisted there would be “no compulsion” for local authorities to impose a tourist tax and pounted out that Scotland was facing an “incredibly competitive” international market.
Ms Hyslop highlighted that although there was a rise in overseas tourists last year the increase was not matched by spending from visitors.
The Scottish Government has long resisted pressure from local authorities such as Edinburgh to give them the power to impose a “transient visitor levy” over concerns about its impact on an industry which is estimated to be worth more than £11 billion to the economy and supports more than 200,000 jobs.
However the introduction of legislation was agreed as part of a deal with the Greens struck during budget negotiations in January.
Speaking at the conference at the SEC in Glasgow, Ms Hyslop said: “I am deeply committed to supporting the Scottish tourism sector, and to enabling it to maximise its success - success that is both good for business and good for all of Scotland and its people.
“Sometimes that is challenging – not least when the Scottish Government had to agree to consult and legislate on a locally determined tourism tax.
“This was as a direct result of negotiations with the only party willing to seriously engage in the budget process, and was a necessary part of the agreement which enabled us to deliver a budget that provides certainty and stability to tax payers and businesses at a time when we face significant challenges from the UK leaving the EU.
“The contributions that we have already received as part of the previous national discussion on the tourist tax have been extremely useful in drawing out a number of the very important and complex issues and concerns.
“That legislation will allow those local authorities that wish to do so, to introduce a tax to meet the needs of their own area.
“Let me be clear about two things – firstly, there will be no compulsion for local authorities to implement a tourism tax.
“Secondly, the requirement for the Scottish Parliament to consider legislation means that there will be no tourism tax levied in 2019 or indeed 2020 season, as consultation, legislation and indeed implementation if any council wants to introduce a tax, will take some time.
“As the Scottish Government and Scottish Parliament take forward and consider this legislation, it is important that everyone’s voice – all of your voices - are heard, so that whatever is produced services tourism’s needs.”
In her keynote address, Ms Hyslop said the government was taking the issue of freedom of movement “extremely seriously” and told delegates at the tourism summit that a no deal departure from the European Union would be “catastrophic.”
She added: “For those EU nationals who have made Scotland their home, we want to let you know that we value you, we value your contribution to our country, our economy and culture, and we absolutely want you to stay - you will always be welcome in Scotland.
“We cannot be complacent. The growth the sector continues to see is very much welcome but it needs to be acknowledged that our tourism sector is fragile.
“Yes, we have seen success in terms of the growth of visitor spend, which saw an increase of more than three per cent last year, but this is not commensurate with the growth in visitor numbers. which means our visitors are not spending as much when they are here.
“The international market is incredibly competitive and we need to continue to work extremely hard to draw visitors to Scotland and ensure they have an outstanding experience when they are here.
“I recognise that this remains a challenge and that the impressive headline figures may not accurately reflect the challenges that Scotland’s businesses, your businesses, are facing to remain competitive, particularly from increasing overheads and the impact of a weaker pound on costs of food and drink.
“Our success is also tempered by a time of unprecedented challenge and we need now, more than ever, to ensure the world knows Scotland is open and welcoming.”
Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “The Scottish Government and told us that they had nowhere else to go during the budgetary negotiations because the other parties were not prepared to engage with them.
“The cabinet secretary was very clear that there is a process that still needs to be applied. There has been an inference from some councillors that the tourist tax is something that could come into effect this April. We have also heard from businesses that thought that was the case.
“I was exceptionally concerned that on the day the legislation was announced there were headlines around the world saying Scotland now had a tourist tax. Straight away, we had the potential risk of people thinking we already have it in place, even in the UK domestic market.
“What is still not fully understand by many local authorities and the general public is what the true impact of the tourist tax might be, both in terms of the costs involved, and on visitor numbers, bearing in mind the unchartered territory we are about to go into.”
Lothians Labour MSP Kezia Dugdale, who has been campaigning in favour of the tourism tax, said: "Following public consultation there is overwhelming support for the introduction of a tourist tax in the city. Not only do the majority of local residents want and support a tourist tax but so do business and accommodation providers.
“It’s estimated the introduction of the tourist tax could raise up to £14.6m every year for Edinburgh. However, the money the tourist tax can raise is just a small fraction of the cuts that Edinburgh Council is having to make.
“For the SNP Scottish Government to block local government using these powers is a slap in the face and only compounds the cuts they are already forcing on local councils. Local government should be handed these powers sooner, rather than later, to allow them to help grow a sustainable tourist economy.”
Edinburgh City Council leader Adam McVey said: “Following months of robust research and feedback, we have already submitted our proposals to ministers and MSPs for their consideration but will continue to play a full part in the debate.
“Like the Scottish Government, we are entirely committed to supporting the tourism industry – it’s a massive contributor to our economy – and we have been clear throughout that our scheme should reflect the needs and interests of everyone in the city.
“We acknowledge that legislation will take time to implement but, having already done extensive work on an Edinburgh scheme, we’ll be ready to go when the time comes.
“I’m confident our proposals offer a fair scheme which will be simple to implement but we’ll continue to work closely with industry to ensure our scheme works for all.”