UK Hospitality has revealed that the impact of a tourist tax could cost Scotland around £175m – and potentially £45million in Edinburgh.
Willie Macleod, Executive Director of UK Hospitality, was today (Thursday 4 October), giving evidence at the Scottish Parliament’s Culture, Tourism, Europe and External Affairs Committee in response to the continued efforts of local authorities and COSLA to introduce a Transient Visitor Levy.
Initial calculations by UK Hospitality’s economic adviser, show that Scotland could be at a significant economic disadvantage as a result of a tourist tax being implemented, with Edinburgh alone being more than three times worse off should a £2 a night levy be introduced across the country.
Willie Macleod said: “Our preliminary figures show that the true impact of a tourist tax could cost Scotland up to £175m – and Edinburgh £45m. This far outweighs the financial benefits of an £11m revenue that City of Edinburgh Council anticipates will be raised from a £2 a night tax. Critically, the disadvantages would be far greater than the advantages.”
The committee session came after the First Minister’s announcement on Monday at the Scottish Tourism Alliance (STA) conference in Edinburgh, that a national consultation on the idea could be considered. Alongside representatives from the STA, Association of Scotland’s Self Caterers and Peter Irvine, author of Scotland the Best, Mr Macleod gave evidence on behalf of UKH members, the majority of which remain heavily opposed to the idea of a tax.
Mr Macleod continued: “UK Hospitality remains stridently opposed to the introduction of any tourist tax.
“However, following the First Minister’s earlier announcement, we very much welcome the Governments’ recognition that any consultation would be managed through an objective process of meaningful national debate involving all key partners and examining, in detail, issues such as the purpose of any proposed tax, options to a direct tax on consumers and, critically, impacts on businesses and their customers.
“Scotland’s hospitality and tourism industry is already a major contributor to the economy and the tax is opposed by a wide spectrum of tourism businesses, not just within the accommodation sector.
“With the UK ranked by the World Economic Forum as 135th out of 136 countries for tourism price competitiveness, our high rates of VAT, relative to our EU competitors remain one of the most significant challenges in encouraging visitors to Scotland. As a result, we firmly believe that applying a further tax will be unnecessarily damaging on tourism and further affect our already poor price offering.”
Whilst UK Hospitality recognises that visitors, especially from overseas, are unlikely to decide against a destination simply because there is a tax on tourists, there is clear evidence that price increases have a negative impact on overall visitor demand and spending. This will affect bars, restaurants and a large number of attractions, will result in a decline in visitor demand and will threaten the jobs of some of the 200,000 people working in the industry in Scotland.