Home>Tax News, Uncategorised>Do you think a Tourism Tax is a good idea?

Do you think a Tourism Tax is a good idea?

Next week Edinburgh Councillors will vote on whether to take forward a proposal to introduce a ‘transient visitor levy’ (TVL) to the public consultation stage. Supporters of the ‘tourism tax’ predict that it would bring in £11 million every year to the council’s budget. But there is some opposition, largely due to a perceived lack of industry involvement to date.

How much is this ‘transient visitor levy’?

The proposal suggests that people visiting Edinburgh will pay either an extra £2 per night or 2% of their total accommodation bill, to a maximum of seven nights. This will apply throughout the year and to all sorts of accommodation, even self-catering rentals.

Why are the Edinburgh Council in favour of these plans?

As reported by The Express, the council’s leader Adam McVey explains:

“These draft proposals will form the basis for wider public consultation with all of our stakeholders and, importantly, with the residents of this city. It is another important step in our engagement strategy and on our journey towards securing a TVL for Edinburgh. Our work over the summer has focused on key stakeholders, particularly those in the hospitality trade, and we are continuing to engage with them on the details of what an Edinburgh scheme could reasonably look like and options for implementing it. We continue to believe that a TVL is in the best interests of our residents, our tourism industry and those who visit us, and we fully expect the robust, professional approach we are taking to achieve a positive result for the capital.”

With such a huge amount of new income, perhaps council tax bills for residents could be cut? Or maybe businesses could see the benefit with smaller business rates, lower Corporation Tax or lower VAT? Just a few possibilities to be considered when thinking about spending the new tax.

Why are some people opposed to the new tax?

On the face of it, it’s a comparatively small additional amount and the collective £11m total would make a huge difference to the council’s capabilities. But the Scottish Tourism Alliance (STA) are not convinced. Their spokesperson said: “The STA is disappointed that Edinburgh City Council has proceeded to launch a consultation on its plans to charge a tourist tax of £2 per room, per night, having had no formal or meaningful engagement with Scotland’s tourism industry to date. The time has come for an objective, well-informed national, rather than local, debate following the conduct of independent research. We look forward to receiving more detail in response to our request from the Scottish Government.”

Where do the Scottish Government stand on this issue?

Fiona Hyslop, the Culture and Tourism Secretary said: “Our current position remains that we are not in favour of introducing a visitor levy, unless the tourism industry itself is involved in the outset. I think in terms of the pressures the industry is facing that this is not necessarily an appropriate time for that to be considered anyway.” Interestingly she also said that Scotland is “perceived as a very high cost location” because of the comparatively high 20% rate of VAT. Edinburgh council can’t make this move unilaterally, without the support of the Scottish government, so the pressure will be on any consultation that is voted for.

What will the consultation ask?

The consultation document will ask about the array of possible options that this new tax could include, such as: if charges are a flat price in pounds or a percentage, if charges should be capped at the proposed seven nights, how much the charge should be and the sort of accommodation it should apply to.

Does anywhere else have a tourist tax?

If this proposal is actioned, Edinburgh will be the first British city to apply a TVL. Other cities, such as Barcelona and Paris already have such a tax in place, perhaps we could learn from their system before reinventing the wheel here. With other UK holiday destinations, like Oxford and Bath, already in favour of a TVL, maybe the most sensible thing is to have a full national investigation and decide on a collective way forward.

 

 

September 28th, 2018|Tax News, Uncategorised|

About the Author:

Taxbanana.com – helping you pay the right tax and save money.