A potentially “disastrous” tourist tax in Edinburgh will be shaped over the next 12 months, the city’s council has claimed.
The council decided last month to push forward with its own plan for an extra £1 charge on tourists staying in the city, which it said would generate around £11m a year, but to go ahead the authority will need the Scottish government to approve plans.
UKHospitality chief executive Kate Nicholls said: “The introduction of another tax aimed at hardworking, innovative and economically and socially important hotels in Edinburgh could be potentially disastrous knock-on impact on businesses.
“There has been no meaningful consultation with the businesses at risk and no wider discussion with the national organisations representing the hospitality and tourism sector.
“Hotels and hospitality businesses are already facing a mountain of costs and any additional tax, no matter the cost, would present vital employers with a significant barrier to growth an investment.
“The UK is one of only three EU countries which does not have a reduced rate of VAT on hotel and tourism services -– by comparison, the rate of VAT on hotel rooms in EU countries is about half of the 20% rate applied in the UK. In the majority of EU countries which have some form of tourist tax, there is a reduced rate of tourism VAT.”
The Scottish Tourism Alliance also called for a national debate after the council demanded the power to introduce the tax.
The Scottish government has indicated that it will not legislate to grant powers to local authorities to introduce a bed tax.
A spokesperson said: “We have been consistent in our stance that given the potential impact on tourism, we have no plans to introduce a visitor levy on the tourism sector, which is already subject to the second-highest VAT rate in Europe by the UK government.”
City of Edinburgh Council leader Adam McVey said: “Edinburgh has one of the highest room rates and highest occupancy rates anywhere in the UK. Our 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 success of the City’s tourism economy.
“Our initial plans to move forward have been agreed by Council and we are now in the process of business engagement. We have never said the city’s TVL will be raising income by next summer however we are working to conclude our process by then. We will therefore have a clear idea of the shape of an Edinburgh TVL in the next 12 months.
“We have had constructive discussions with Scottish Government Ministers and cross party MSPs to date. COSLA, the voice of local government in Scotland, have now added their backing to the debate, unanimously supported by Council Leaders across Scotland. While there is no agreement with the Scottish Government, we are confident that the professional and robust way we are taking this policy forward will lead to its implementation. This is the beginning of a considered, thoughtful and professional engagement with our partners across the tourist and hotel industry, the people of Edinburgh and the tourists who would ultimately pay the levy.”