Edinburgh Closer to Introducing UK's First Tourist Tax

Submitted by edg on Tue, 29 Jan '19 9.19pm
Edinburgh's Hogmanay torchlight procession heading down the Royal Mile

The City of Edinburgh Council has completed submission documents for the Transient Visitor Levy (TVL), aka Tourist Tax, for Edinburgh.

The proposed TVL will be imposed on Edinburgh accommodation at a flat rate of £2 per night per room for each of the first seven nights of a stay.

The only type of short-term accommodation within Edinburgh boundaries that would be exempt from the tourist tax would be campsites.

The Council must recommend its proposal to Ministers and MSPs for consideration, subject to approval from elected members at a meeting of the Full Council next week (Thursday 7 February).

If Edinburgh CIty Council gets the go-ahead, it would become the first Local Authority in the UK to introduce such a scheme.

Tourism is a key part of Edinburgh’s economy with more than four and a half million visitors annually, spending £1.8bn. The tourism tax would bring in an estimated £14.6m which, Council proposes, would be reinvested in areas supporting and managing the impacts of tourism.

Making the case for a TVL in Edinburgh, Council Leader Adam McVey, said: “The Capital’s population is increasing rapidly and visitor numbers continue to grow, due to Edinburgh being a fantastic place to live, work, visit and invest. Our economic strength has brought us a great deal of success as a city but the reality is, without an additional income stream, we will struggle to manage and support this success in future.”

The TVL has been tailored in part from feedback to a public consultation at the end of last year.

Edinburgh City Council says that 85% of the 2560 respondents “expressed strong support for the introduction of a TVL in Edinburgh, as did the majority of all category stakeholders, including Edinburgh businesses and Edinburgh accommodation providers.”

The Council points out that in recent years tourist taxes have been adopted widely, in cities such as Rome, Berlin, Barcelona, Budapest, Hamburg, Milan, Turin, Dubai, Lisbon, Palma Majorca, Porto and Vilnius.

Italy has over 60 destinations with a varied visitor tax rates. For example, Edinburgh’s twin city of Florence charges €2 (£1.75) for hostels to €5 (£4.40) for high end hotels, per person per day, up to seven days. Rome charges from €3 (£2.63) to €7 (£6.10).

However, industry group Scottish Tourism Alliance (STA) has questioned the level of industry support for an Edinburgh tourism tax, particularly from accommodation providers who will likely collect the tax. STA has argued that the TVL could have “a potentially devastating long-term impact” given that tourism operators in the UK face “the second highest VAT rate in Europe at 20%”.

The STA says:

The UK is second from bottom in the World Economic Forum ranking, 135/136, when measured solely on international tourism price-competitiveness; this is in stark contrast to its overall ranking of 5th in the world when the full range of international tourism indicators are included.

This underlines that the introduction of a tourism tax or any such visitor levy would further reduce the competitiveness of our already heavily taxed sector relative to competitor destinations.

Nevertheless, for Cammy Day, Depute Council Leader, the strain that visitor numbers are putting on city infrastructure underlines the necessity of the tax:

“A TVL would be a fair and efficient mechanism to raise funds to reinvest in our beautiful, historic city. Being successful as a visitor destination comes at a cost. Why shouldn’t it come at a modest price to visitors, too?"