Trade body highlights downsides of city tourism levy

The trade body warned the tax will do nothing to support accommodation providers and the levy imposed, which will attract 20% VAT, will be on top of the 20% VAT visitors already have to pay when booking accommodation in Scotland.

SLTA managing director Colin Wilkinson said: “The comparison many European countries have some kind of visitor levy is often used.

“However, our European neighbours do no charge 20% VAT on accommodation so here it is effectively a ‘tax on a tax on a tax’.”

According to the council, the levy scheme will include a flat 5% of the accommodation cost, capped at seven consecutive nights.

Hugely concerning

It is expected to raise between £45m and £50m a year by 2028/29 and the council stated revenue generated will be reinvested directly into initiatives that benefit residents and enhance visitor experiences.

Wilkinson added: “We have no issues with money from the scheme being used to reinvest in the city’s infrastructure and sustainable tourism but why should accommodation businesses be asked to contribute funds towards affordable housing? That seems unfair.

“It’s important to remember this is not just accommodation providers that benefit from tourism – many other sectors also benefit but it is the hard-pressed accommodation sector that is being targeted with administering this tax – another cost to business.

“We are also hearing some local councillors in other areas are suggesting imposing a visitor levy of up to 12.5%, which is hugely concerning.

“Government ministers can intervene if excessive visitor levies are imposed but what will exactly trigger that intervention?

“These levies must be set at a reasonable level at a time when businesses are under inflationary and other pressures including the ongoing cost-of-living crisis.”

Additional charges

Wilkinson questioned if company’s views will be taking into account during the consultation process, which is set to inform the final scheme before it is agreed in January 2025, allowing the 18-month implementation period to start.

“Even with a consultation process and the formation of local forums to decide on the level of a visitor levy, if one is to be introduced will businesses’ concerns be truly taken into consideration?” the SLTA boss said.

“When budgeting a holiday, any additional charges for visitor accommodation could well mean less spend in other business sectors.”

This follows a warning from UKHospitality Scotland, which called for the levy to be kept to a “reasonable minimum”​.