Extra Tax Must Be Put To Bed

Stewart Nicol, Chief Executive, Inverness Chamber of Commerce

With the tourism season now almost in full gear in the Highlands, I make no apologies for returning to a subject which is causing concern amid unprecedented challenges in the sector.

The Scottish Government has held a series of discussions on a possible Transient Visitor Levy, or tourist tax. More than 130 written submissions were sent, including a letter I lodged on behalf of Inverness Chamber of Commerce outlining why we feel this will be an unwelcome imposition on the already hard-pressed industry.

The national discussion, in general, showed a shared appreciation of the importance of tourism as a key sector of the economy and for growth and opportunity, particularly in areas outside of Scotland’s main cities.

Some organisations, including a number of councils and the local authority umbrella body Cosla, feel devolving powers to use a small levy on visitors or accommodation would help maintain and improve facilities for visitors at a time of public sector constraints.

But accommodation providers, and others representing the tourism sector tended to be strongly opposed to tourist taxes, emphasising the sector’s existing tax contributions and the fact that the UK VAT rate applied to accommodation is among the highest in the EU.

From a business point of view, there is concern a tourist tax will add to costs of doing business and impact on profitability, particularly in more rural areas, and also affect the competitiveness of the sector compared to the rest of the UK, and internationally.

Although it will be at least 2021 before any legislation allows these new tax-raising powers, if approved, we feel pressure must be maintained to ensure any future threat should be removed.

The tourism and hospitality sector has, for some time, faced difficulties with recruitment and this has been critically exacerbated by Brexit and the uncertainty it poses for the huge numbers of staff from EU countries working here.

The sector has also faced significant cost challenges, particularly around business rates and a new, additional, levy would add another burden.

Other countries, particularly in Europe, operate tourist taxes but the fiscal regime in such countries is fundamentally different and much lower.

Inverness Chamber also has questions about having the tourism levy collected by local authorities, imposing an additional administrative burden on councils, at a time they are under significant and increasing financial pressures.

There are also potential consequences for the business community. Business people in the Highlands travelling to other parts of Scotland could be subjected to paying more for their stay, as will in-bound visitors doing business in the Highlands. 

We don’t want to see the Highlands regarded as an increasingly expensive place to visit for business or leisure. Therefore, this extra tax must be put to bed to allow the sector to sleep soundly.