Edinburgh faces ‘potentially disastrous’ tourist tax

A “potentially disastrous” tourist tax could be implemented in Edinburgh within a year, writes Emma Lake.

UKHospitality has warned about the potential impact of the tax on the hospitality sector and urged the council to consult businesses and organisations before pursuing its introduction.

Leader of Edinburgh City Council, councillor Adam McVey, tweeted: “In the next 12 months our plans for a ‘tourist tax’ will be ready for implementation. While it may take longer to deliver the powers necessary to start collecting, our timeline is robust and we’ll be ready to go!”

The council is pursuing its own plan for an extra £1 charge on tourists staying in the city, which it estimated would generate about £11 million a year, but approval from the Scottish government is needed.

Kate Nicholls, UKHospitality chief executive, said: “The introduction of another tax aimed at hardworking, innovative and economically and socially important hotels in Edinburgh could be potentially disastrous, with a knock-on impact on businesses.

“Adam McVey has rather blithely announced on social media that a tourist tax would be introduced in the city within 12 months; yet there has been no meaningful consultation with the businesses at risk and no wider discussion with the national organisations representing the hospitality and tourism sector.

“Hotels and hospitality businesses are already facing a mountain of costs and any additional tax, no matter the cost, would present vital employers with a significant barrier to growth an investment.

“The UK is one of only three EU countries which does not have a reduced rate of VAT on hotel and tourism services -– by comparison, the rate of VAT on hotel rooms in EU countries is about half of the 20% rate applied in the UK.  In the majority of EU countries which have some form of tourist tax, there is a reduced rate of tourism VAT.”

The Scottish Tourism Alliance also called for a national debate after the council demanded the power to introduce the tax.

The Scottish government has indicated that it will not legislate to grant powers to local authorities to introduce a bed tax.

A spokesperson said: “We have been consistent in our stance that given the potential impact on tourism, we have no plans to introduce a visitor levy on the tourism sector, which is already subject to the second-highest VAT rate in Europe by the UK government.”

Pictured: A MacTours City Tour – part of Edinburgh Bus Tours. Credit: VisitScotland/Paul Tomkins