SNP considering visitor levy charge with council tax-style bandings

The visitor levy would apply to those staying in hotels, hostels, bed and breakfasts, self-catering accommodation, campsites and caravan parks.

Wild campers and people in motorhomes and camper vans who pitch elsewhere would not be covered.

The visitor levy is not expected to be rolled out until the spring of 2026 at the earliest.

Read more: Scottish Government publish 'tourism tax' legislation

As the legislation stands, the levy would be a percentage of the overnight accommodation cost, with the rate set by the local council. But SNP Public Finance Minister, Tom Arthur, has left the door open to overhaul how the charge will be calculated.

He said that despite the current percentage charge offering “simplicity and proportionality”, he acknowledged concerns of the tourism sector and will hold crunch talks with the sector and local government to investigate the best way forward.

But it is understood that the model that is set to be favoured is a system that puts room rates in tiers of bands, much like council tax, with a set charge set against each band.

The proposal has been drawn up by the Scottish Tourism Alliance and it is understood that the Scottish Government is actively considering the idea.

But Edinburgh City Council, one of only a handful of local authorities to explicitly state their intentions to roll out a tourist tax, is calling for a percentage charge to be introduced, believing it is fairer as it ponders over setting between 3% and 5% of a room rate as the levy.

It is understood the Scottish Greens, who prop up the Scottish Government at Holyrood, would see a flat rate across all prices of accommodation as regressive.

Read more: Tourist tax 'could lead to more anti-social camping' in the Highlands

Under the tiered or banded proposals, accommodation that costs up to £50 per night, for example, could be put in band 1 at £1 per night or £1.50 for two or more people, capped at seven nights.

Room that cost, for example, £200 to £400 could incur a £7 visitor ley charge per night, which would be less than £50 for a weekly stay.

Meanwhile, a 5-star hotel would have a £9 visitor levy charge, which would be £63 for a week.

Marc Crothall, chief executive of the Scottish Tourism Alliance, told The Herald on Sunday that the £63 weekly visitor levy for the highest-end accommodation is seen as the “tipping point” before visitors look elsewhere.

He added that the banding or tiering would be “ a more simple mechanism” than “having one place charging a percentage or another local authority just adding a flat £1”, warning that “makes it pretty messy”.

Mr Crothall said: “We have heard about Edinburgh talking about a 4% or 5% levy on a hotel bill.

“If you are in the Balmoral for five nights with 4% or 5% on top, that’s money that is not being spent in the local economy.

Marc Crothall, chief executive of the Scottish Tourism Alliance (Image: STA)
“The tiering system does exist in other countries. It allows for a fixed fee.

It flexes with the rate. It’s a fixed amount rather than individual rates factored by percentages.”

Mr Crothall has warned that the visitor levy needs to be “a force for good for tourism”, but stressed Scotland and the UK are “already a very expensive offering”.

He added: “The offering elsewhere around the world is very strong and there’s continued investment.

“If you hop over the Border to the Lake District, there’s no levy. So if I’m weighing up Loch Lomond or Kendal, it’s an extra charge to pay.

“Edinburgh is not as busy as we would hope. There’s not as much capacity as we would like. It is busy but we could do with much more year-round tourism, so we cannot do anything that would put off people coming here.”

Under the plans, local authorities will reinvest the money raised in “facilities and services that are substantially used by visitors, benefitting tourists and local economies”, according to the Scottish Government.

But concerns have been raised about what that might mean in reality.

Read more: Analysis: Scottish council funding business as usual won't cut it

Mr Crothall said: “This is not just a simple case of allowing a charge and there you go. It needs to be ring-fenced money that benefits tourism. It cannot be a hand-off to fill the shortcomings of certain areas.

“We appreciate local authority budgets are very stretched, but there’s a risk money will be used by future administrations, who may not appreciate the value of tourism, for other things. It should also be cost-neutral to business.

“We are already ranked 140th in the world, that’s bottom of the pile, for the tax conditions for a visitor visiting the UK. With this charge, we are becoming an even more expensive destination.

“People have said that it won’t make a difference to whether visitors will still come but I think it is very dangerous to make that assumption. People have a lot of choices and some of the other offers are competitive.

Read more: Visitor levy could become flat rate as tourist tax passes first hurdle

“The cost-benefit analysis has to be done very thoroughly before any local authority thinks about implementing it.”

The Scottish Conservatives, who oppose the visitor levy, are calling on the Scottish Government to draw up a clearer scheme and answer the concerns of the tourism industry.

Tory shadow business, economic growth and tourism secretary, Murdo Fraser, said: “One of the chief problems with the proposed tourist tax is that – like so many of their policies – the SNP hasn’t thought it through.

Scottish Conservative MSP Murdo Fraser (Image: PA)
“Our world class tourist sector is already hammered by SNP tax policies and yards of red tape. Any tourist tax risks endangering a sector worth £4.5 billion to the Scottish economy which directly supports over 250,000 jobs across the country – many in rural and island communities.”

He added: “This SNP-Green Government hasn’t been clear on how it would work, or listened to businesses who have shown how damaging this might be.

“The differences between a banding, tiered, percentage or flat-rate approach will have huge implications for businesses – and could be critical for small operators.

“A percentage scheme would carry additional administrative burdens for an already hard-pressed sector, which is why many are pressing for an alternative.

“We need detailed proposals that won’t hold hobble a crucial part of Scotland’s economy.”

Cammy Day, the Labour leader of Edinburgh City Council, told The Herald on Sunday that his preference would be a percentage of a room rate to be maintained as the visitor levy, which he insists should be set by local authorities drawing up the scheme.

He said: “I really appreciate the way the Scottish Government is eventually taking forward the visitor levy.

“I think there’s a decision about whether it’s a flat rate, percentage or banding.

Leader of Edinburgh City Council, Cammy Day (Image: PA)
“As we’ve always said, as we engage with the city, I think our preference would be a percentage – it would save any continued discussions and arguments about whether you are in a slightly cheaper B&B you pay x% or if you are in a 5-star hotel in the city, you would still pay the corresponding percentage for the price of that room.”

Mr Day added: “I think it’s clear for everybody, there’s no bandings, there’s no room price changes, it’s just a simple straightforward percentage, which would be our preference.

“So whilst we are not against banding or tiering, I think it’s more complex than a straightforward percentage that should be set by the city.”

The council leader has insisted “the city is ready to go” when the tourist tax is rolled out, but he stressed that “the business community will need to get business ready for it”.

He added: “We haven’t agreed on a percentage charge, if we are allowed to make that, which we have argued should be for local authorities across the country to decide.

“The numbers we were discussing were somewhere between 3% and 5% and I think that’s a reasonable amount given the vast spectrum of visitor levy charges across Europe which go from a few per cent to some in excess of 10%.

“I think Edinburgh sitting somewhere in the middle would bring a reasonably good income into the city to allow us to make some vast improvements on top of, we hope, an improvement settlement from the government, sometime in the future.”