Edinburgh makes case for 'tourist tax' with new research

Edinburgh has long campaigned for powers to introduce the tax, known as the Transient Visitor Levy (TVL), though it remains unpopular with members of the hospitality industry.

Read more: Businesses oppose Edinburgh tourism tax plans

Now in new research compiled by Edinburgh City Council, it says that the TVL would not deter tourists from visiting the capital.

A charge of £1 a night per visitor could result in an extra £11 million a year in income, however this could reach up to £29 million depending on the way the tax is imposed, the report said.

The research, which examines the Edinburgh accommodation sector, also looks at the policy context and examples of a similar TVL in other cities.

It said: "Edinburgh would remain globally competitive in terms of taxation even if a TVL is adopted when compared with the overall taxation prevalent in other cities such as Venice, Rome, Budapest and Florence."

The council said that the findings would be debated by councillors at a meeting on Thursday May 31 ahead of a detailed proposal to be presented to Holyrood later this year.

Earlier this year, Edinburgh City Council said it found a "significant" level of unprompted backing from the public for plans to introduce a levy on hotel rooms to help pay for increased services such as street cleansing as visitor numbers continue to rise.

Read more: Surge in support for tourist tax in Edinburgh for 'inconvenience and disruption'

Currently local authorities do not have the power to introduce a tourist tax and establishing such a power would require an act of the Scottish Parliament.

Such taxes are commonplace in other European cities and countries, including Paris, Rome, Venice, Amsterdam and Berlin.

There are no places in the UK that have introduced a tourist tax, though places including Oxford, Bath are currently considering the scheme.

Aberdeen and Glasgow have also previously indicated they are interested in a local taxation option.

It comes as leaders across all 32 Scottish Local Authorities met today to discuss next steps in the TVL to campaign to secure the legal power for local government to implement a levy.

Edinburgh Council Leader, Adam McVey, above, said it was important to point that this was not a tax on business, "rather a small contribution by tourists towards the services they use during their stay".

He said: "This research demonstrates that not only is a TVL unlikely to adversely affect Edinburgh’s hotel industry, but that handled correctly, it can help to secure the ongoing sustainability and health of tourism in the city."

He said the research was the start of an ongoing engagement with partners across the tourism and hotel industry, and people of Edinburgh.

Deputy leader, Cammy Day, added the the council would publish further details of its proposals in the coming weeks and encouraged those with an interest to get involved in the debate.

John Donnelly, Chief Executive of Marketing Edinburgh has backed the concept, saying that a solution was needed "that balances Edinburgh’s growing tourism demand against our shrinking public budgets".

He said: " The amount contributed per visitor is tiny – it would have no impact upon our increasing visitor appeal.

"Indeed, I’m unaware of evidence that would indicate anything other than a positive effect on the city."

Read more: Would a tourist tax really help us manage the influx of visitors?

However members of the hospitality industry have voiced their concerns at the introduction of a tourism surcharge.

The Federation of Small Businesses cited its own research, saying that around three quarters of businesses in the city opposed a levy, with a similar proportion believing it would have a negative impact on the local economy.

A FSB Scotland spokesman said: "Speaking to members about this, they are mostly anxious about the message it sends to potential visitors.

"Then there's an administrative impact associated with collecting and distributing a tax on behalf of local government.

"Thirdly the tax will make the product that you sell, if you happen to be an accommodation provider, more expensive and most people in business don't want to increase increase their costs."

UKHospitality, formerly the British Hospitality Association (BHA) said the levy had the potential to discourage visitors, especially international travellers who are known to be highly price-sensitive.

UKHospitality Scotland's executive director, Willie Macleod, said: "The Council is clearly not listening to the clear and sustained views of businesses and, in particular, the hospitality industry, that an additional tax on users of commercial accommodation will damage the competitiveness of tourism in Scotland.

"Applying an additional tax on visitors who use hotels and other forms of accommodation is highly discriminatory in that it ignores the many visitors to Edinburgh who stay with friends and relatives and, indeed, the 18 million or so day visitors who are attracted to the city each year."

He also referenced the low VAT in cities such as Paris, Amsterdam or Rome, compared to the 20 per cent applied in the UK.

The Edinburgh Hotels Association said it fully alligned with UKHospitality Scotland's position and statement.

A spokeswoman for the Scottish Government said that it had "no plans to introduce visitor levy on the tourism sector, which is already subject to the second highest VAT rates in Europe by the UK Government."