Edinburgh will be first city in UK to get tourist tax
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It means local councils will be given the power to bring in a visitor levy if they choose. A formal consultation on the move will take place this year before the necessary legislation is brought forward.
It is not clear how soon the new levy could then be implemented, but Edinburgh looks set to the first place in the UK to introduce a tourist tax.
The budget deal – agreed at the eleventh hour before a debate in the Scottish Parliament yesterday – also gave councils across Scotland extra cash, which means the savings Edinburgh must find for 2019/20 are reduced from £41 million to £34m.
Councils will also be given the power to introduce a workplace parking levy and to increase council tax beyond the current limit of three per cent.
Finance Secretary Derek Mackay told MSPs: “These additional measures will deliver the most significant empowerment of local authorities since devolution and provide additional funding to support local services.”
City council leader Adam McVey was delighted with the go-ahead for the tourist tax and the parking levy. “It’s really great for Edinburgh,” he said.
“On both of these, Edinburgh has been leading the debate. They are in our programme and we have been making representations to the Scottish Government for some time.
“It’s a really strong day for local government as a whole on discretionary taxation, but it’s a fantastic day for Edinburgh, showing the fruits of our labour over the past 18 months.”
Scottish Government ministers had previously resisted efforts by Edinburgh and other councils to press for the ability to levy a tourist tax.
Tourism and Culture Secretary Fiona Hyslop famously slapped down Cllr McVey last summer when he suggested the Capital would be “ready to go” with a tourist tax within 12 months.
However, the Greens made the tax and the parking levy key parts of the budget demands.
The Scottish Tourism Alliance said the government’s announcement was “beyond disappointing” and claimed it would deliver a significant blow to the industry.
It noted a government consultation on the idea of a tourist tax had closed only three days earlier and said a decision had been reached prematurely.
The STA statement added: “It will only serve to undermine the confidence that the thousands of tourism businesses operating across all sectors of the industry has had in the Scottish Government.
“We sincerely hope there will be further economic analysis and detailed transparent examination of options to assess the impact a tourism tax will have Scotland’s economy, before any implementation is permitted to come into force.”
And the Association of Scotland’s Self-Caterers (ASSC) said the tax would be “highly detrimental”. Chief executive Fiona Campbell said: “We are disappointed the Finance Secretary is so willing to gamble with such an important part of Scotland’s vital tourism offering for the sake of political horse-trading.
“However, we do take some comfort from his commitment to a full consultation on the issue – we hope that common sense prevails.”
Gavin Corbett, the Greens’ finance spokesman on the council, welcomed the deal reached on the budget. He said: “What Green MSPs have negotiated sets in train the biggest shake-up of council funding for almost 30 years and in the meantime takes the edge off some of the cuts for next year, while also loosening some central control of budgets.
“It still makes for a difficult budget for Edinburgh for next year. However, there is some real progress here, won by serious negotiations and in stark contrast to the pitiful positions of the Tories and Labour who are too mired in their Brexit chaos to even make the effort over the Scottish budget.”
Tory group leader Iain Whyte said the decision to allow councils to levy a tourist tax was a major U-turn by the Scottish Government.
But he said: “It’s not going to make any difference for the coming year and maybe not the two years after that, depending on how the consultation and the legislation goes.
“A levy will have a potentially damaging impact on the tourist industry – certainly if other places like Glasgow don’t implement it, it’s a barrier to attracting people here.
“And there is no indication how they would spend it. The tourist trade will want it spent on things that attract visitors, but residents will want it spent on basic things like roads, pavements and emptying the bins. That’s a big clash which no-one has tried to sort out.”
Lothian Labour MSP Kezia Dugdale welcomed the move to a tourist tax in the Capital.
She said: “Asking visitors to contribute towards the city’s upkeep is common practice across Europe with tourist taxes established in Paris, Amsterdam and Berlin already to name a few. A modest levy, that could be ring-fenced to support the upkeep and invest in our tourist infrastructure would bring considerable benefits to the city.
“However, the money the tourist tax can raise is just a small fraction of the cuts that Edinburgh Council is having to make.
“This is a step in the right direction but local government still needs a fair funding settlement to protect our vital services and stop long term damage being done to the cities most deprived communities.”