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Opinion: A Tourist Tax is too Important to get Wrong

Despite objections from Scotland’s vital tourism industry, the Scottish Government has made it clear that it wishes for local authorities to have the power to place a levy on visitors to their areas in order to raise revenue.

Although plans have been put on hold during the Covid-19 pandemic, there remains much discussion about the pros and cons of a Tourist Tax. A tourist tax now appears to be inevitable.

The ASSC believes that a tourist tax will have a negative impact on Scottish tourism and the Scottish economy. We worry that by charging our treasured visitors we will put a damper on their visits here which poses a real threat to our continued prosperity. We are still adamantly against the idea and believe it would be better if it never saw the light of day.

However, while we hold all this to be true, Scottish tourism is an industry that thrives on being realistic and cooperating as broadly as possible. We believe that we have a unique insight into how this unwelcome levy can be applied to ensure that it is as fair and useful as possible.

Firstly, the competitiveness of our sector must be protected. Scotland currently sits at the bottom of the league in terms of price competitiveness (140 out of 140 countries).

We also have a comparatively high rate of VAT, sitting at 20% – which will also be applied on top of the tourist tax.

These roadblocks, plus the fact that much of Scottish tourism comprises of small businesses and individual and family operators, means that we are already in a precarious position regarding keeping our wonderful tourist offering competitive and therefore must tread carefully with this levy.

Secondly, we need to keep it reciprocal and transparent. On top of the fact that most visitors to places like Edinburgh or Skye, which have been at the centre of the on-going debate over the impact of tourism, come from within the UK so we are in essence charging ourselves an additional tax with this levy, we need to ensure that the money raised from a tourist tax is spent locally to improve services for residents and visitors alike so that those impacted by the charge see real, lasting, and tangible evidence for its continued imposition.

Thirdly, and perhaps most simply, a tourist tax requires sufficient notice to be given of any changes. We would recommend that, in order to protect the industry and those whom it serves, any changes be given at least 18-24 months’ notice before they are applied, after the legislative process is complete. The reason for this is equally simple; the costs of any such change that is given less than this length of preparation time will inevitably be passed on to consumers as business will not have the time to accommodate it. It is for this reason that we recommend that, should the current legislative timeframe hold, no local authority use their tourist tax powers until at least 2023.

Fourthly, naturally, as a major stakeholder and contributor to Scottish tourism, we call for the process of implementing the tourist tax to be as consultative as possible. Local authorities should consider their local industry representatives, communities, and present national level industry bodies to be partners in a process rather than adversaries or competing interests. We all want flourishing communities with top grade services provided for residents and visitors alike and so we must work together, even on this divisive issue, to ensure that’s what we get.

Finally, the successful implementation of any form of tax depends largely on how it is paid and collected. For this reason, the tourist tax must be easy to pay, collect, and process, both for visitors and tourism operators, to ensure as frictionless an application as is possible. This, while appearing obvious, may be the most difficult aspect of this policy to get right and may also turn out to be its biggest test; one which it has to pass but, in reality, will find it very difficult to. The only way to manage and audit such a levy relies on a specifically designed registration system that captures all accommodation models.

Most of all, innovation must be at the core of the approach going forward. If, as the National Strategy vision calls for, Scotland is to be the world leader in 21st century tourism, then any levy must be implemented in an innovative, creative, and world-leading way and not just a ‘digital framework’ as others have done. Moreover, this innovation must also include consideration for different parts of Scotland. For instance, a levy on overnight stays may work in Edinburgh but will do nothing to address the problems faced by other parts of the country. If we’re going to have this potentially damaging measure then it must be innovative enough to negate those risks and find a solution that works for everyone.

BBC Scotland interview, 19th April 2021.

Fiona Campbell

Chief Executive

Association of Scotland’s Self-Caterers

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