Responding to Visitor Levy Consultations

When responding to Visitor Levy consultations, it is important to address the points made in the particular consultation, which will vary according to local authorities.

Don’t forget you are perfectly entitled (and are encouraged) to respond as both a business and a resident to either your own area or an area that you may visit.

You may consider some of the following points in your response, but should add your personal views and circumstances:

Economic Impact and Justification

1. Economic Impact Assessment: There must be a comprehensive economic impact analysis to justify the levy rate and evaluate its effects on the tourism industry and local economy.
2. Baseline Data: Clear baseline metrics must be assessed to track the Visitor Levy’s impacts over time, including potential tourist displacement and effects on local businesses.
3. Rate Flexibility: Multiple percentage options should be explored and seasonal adjustments should be considered to balance economic impact.

Administrative Considerations

1. Simplify Processes: Clear and straightforward processes should be introduced to reduce the administrative burden on smaller businesses, including local authority specific guidance and FAQs.
2. Cost Management: Administrative costs should be accounted for (e.g., system upgrades, training, and credit card fees) to avoid undue pressure on businesses.

Exemptions and Transparency

1. Clear Exemptions: Specific exemptions (not including those defined in law e.g., for homeless individuals, refugees, emergency situations) must be defined with guidelines to minimise conflict between guest and operator and to simplify enforcement.
2. Transparency: Transparent governance and reporting mechanisms for fund allocation are critical, including annual online reports accessible to the public.

Strategic Use of Funds

1. Targeted Investments: Funds must be used to enhance visitor experiences (e.g., heritage sites, cultural events, transport improvements) rather than covering core city services, housing etc.
2. Destination Marketing: Funding for destination marketing to drive tourism, rather than diverting funds elsewhere must be maintained and/or enhanced.

Communication and Stakeholder Engagement

1. Strong Narrative: A compelling narrative must be developed to articulate the benefits of the VL to businesses, residents, and visitors.
2. Broad Consultation: Diverse stakeholders such as local businesses, tour operators, and hospitality groups must be included in consultations to ensure buy-in and gather a range of perspectives.

Governance and Coordination

1. Inclusive Governance: A governance structure must be established that represents all stakeholders, including small businesses and hospitality groups, with minimal council interference.
2. Alignment with Strategies: The VL must be aligned with existing tourism and economic strategies to ensure coordinated and impactful fund usage.

Regional and Strategic Implications

1. Regional Coordination: Collaboration must be promoted across councils and regions to create a unified approach to the levy.
2. Avoiding Displacement: Regional concerns around displacement by ensuring competitive rates and balanced impacts should be addressed.

Monitoring and Review

1. Regular Reviews: Regular meetings of a diverse forum (e.g., tourism boards, accountants, hospitality groups) to review VL performance and spending are critical.
2. Public Accountability: Public reporting of fund allocation and deliverables to maintain trust and credibility are critical.

The visitor levy is the last thing the self-catering sector needs at this time. The industry has come through a pandemic, only to be squeezed by a cost-of-living crisis, and the recovery remains precarious. Moreover, there are significant costs associated with short-term let licensing and planning, not to mention difficulties for operators getting through this intertwined process, with the accumulated regulatory burden for business showing no sign of abatement.

The first question in this consultation asks about awareness of the visitor levy. Many do not yet realise that this levy will not just apply to foreign visitors. A visitor levy will impact ordinary families in Scotland and the rest of the UK when holidaying, or visiting the city. Those seeing family or friends in other parts of the country (for instance, those visiting someone they know in hospital and opting to stay in a hotel, B&B or short-term let), may feel aggrieved at this extra charge when they have already contributed financially to local government. It must not be forgotten that around 70% of tourism in Scotland historically comes from domestic visitors.

Indeed, while international tourist numbers to Scotland are up, this is not the case for the domestic market which makes up the majority of stays for self-catering. In 2024, Price sensitive consumers may switch to holiday elsewhere, hitting local economies across Scotland. A recent PwC report The Impact of Taxes on the Competitiveness of European Tourism, prepared for the European Commission, found tourist demand is highly sensitive to changes in prices. A levy would be introduced at a time when those in our domestic market are facing a cost-of-living crisis which is having a serious impact on tourism and hospitality.

While penalising Scottish families and holidaymakers, the visitor levy will increase the administrative burden for small and microbusinesses like self-catering in Scotland. It will add cost and complexity to a sector that runs on tight margins when they have faced an unprecedented level of challenges from Covid-19, cost-of-living, and increased government regulation.

The proposed levy risks the competitiveness of the tourism industry and ignores that tourists already make a substantial contribution to the local economy. It is true many European markets and cities have levies in place but they do not have our levels of VAT. A new levy here would be in addition to VAT, whereas in 25 EU countries a discounted VAT is applied. When we welcome visitors to Edinburgh, they are met with one of the highest VAT rates in the world and when they depart they are saddled with the highest level of Air Passenger Duty in Europe. Local policymakers need to take cognisance of that when considering the implementation of a levy and the rate in which it is set.

While we oppose the levy, if introduced, all forms of accommodation should be subject to it. There must be a level playing field. Moreover, Councils should lobby the Scottish Government to ensure that cruise ships make their contribution to this levy as soon as practically possible.

Tourism accommodation providers must not be used as unpaid tax collectors for a scheme which might undermine the very industry it purports to support. While there are financial challenges affecting local government across Scotland, this cannot be used as a quick fix for existing council services and as a revenue raiser for general spend. Any monies raised must be for tourism related infrastructure only, showing the sector-specific nature of occupancy taxes.

Finally, if Councils chose to introduce a levy this, they must do it right by working in lockstep with industry to reduce the regulatory burden.

For an updated overview of current Visitor Levy proposals, find out more here.