Both the Scottish Tourism Alliance and UKHospitality have called in to question City of Edinburgh Council’s statement that its proposed £2 tourist tax (TVL) has won “overwhelming support” from accommodation providers. With the Scottish Tourism Alliance (STA) saying its figures were “ambiguous” and UK Hospitality (UKH) expressing that it was “concerned.”
The Council revealed on Wednesday (9th January) that 85% of the respondents to its public consultation expressed strong support for the new tax, which would see a 2% charge or a £2 charge per room, per night, on all forms of letting accommodation. Its figures suggest that just over 40% of accommodation businesses backed the proposal, with only 9% of the respondents against the TVL.
The Council anticipates this way forward would raise £14.6m a year. Again, a figure disputed by UKH. It has estimated that the annual negative economic impact which will arise from the imposition of a TVL at £2 per room per night will be in the region of £175m – £200m in Scotland (£44m – £94m in Edinburgh), being far greater than the amounts expected to be raised.
Commenting on the consultation, City of Edinburgh Council Leader Adam McVey, said, “Once again, we are finding that there is a huge swell of support for a tourist tax in Edinburgh with residents and all types of business backing a scheme that is fair, sustainable, and one which would be reinvested into the ongoing success of our tourism and hospitality industry and the services which matter most to local people.
“A majority of businesses agree the vibrancy of our industry wouldn’t be threatened by a small levy but would benefit from the additional investment. Interestingly, this includes more than half of accommodation providers, dispelling fears in certain quarters that the industry wouldn’t support a tax.”
However, the Scottish Tourism Alliance disagrees. Commenting on the announcement Chief Executive, Mark Crothall, said, “The announcement from the City of Edinburgh Council in response to the results of the recent tourism tax consultation is in our view ambiguous in its claims, specifically with reference to the ‘significant’ support from accommodation providers in Edinburgh.
“Out of the 2560 responses to the consultation, just 17% were from all businesses types, both within and outside Edinburgh which is very low considering the importance of the tourism economy to the majority of businesses within Edinburgh, and only 7% of these were from Edinburgh accommodation providers. 78% of respondents were from Edinburgh residents and just 3% were tourists.
Figures show that only 87 Edinburgh accommodation providers have indicated strong support for a Transient Visitor Levy within the consultation and it is unclear from the figures released by the City of Edinburgh Council what type of accommodation providers these are. This number represents less than 5% of all tourism businesses in Edinburgh (1785).
Out of the 435 total number of businesses that responded to the consultation, it is unclear what sectors or areas all of these businesses are in, for example, or how many of the 162 ‘Other Edinburgh business including visitor attractions’ are actually visitor attractions, retail businesses or other business that directly benefit from tourism spend?
Greater transparency is required and we will be seeking clarity from Edinburgh City Council to better understand the results of the survey and pose questions that we and other member trade associations have as a result of today’s announcement.”
While Willie MacLeod, Executive Director of UKH added, “UK Hospitality (UKH) is concerned at the assertion by City of Edinburgh Council that 51% of accommodation providers in the city are supportive of a tourist tax or transient visitor levy (TVL) being introduced in the city. UKH is in no doubt that the vast majority of accommodation businesses in the city (including hotels, serviced apartments, B&Bs, hostels and self-catering properties) are opposed to a TVL. This is clear from among the independent operators and larger chains in UKH membership and from the membership of the Edinburgh Hotels Association.
He continued, “The Council fails to make clear that the survey response refers to 87 of the 170 accommodation businesses that responded to the council’s survey and representing, respectively, 4% and 8% of the city’s accommodation businesses. It would be helpful if the Council made clear which types of accommodation businesses have responded. This is an important point as, unlike the larger hotels and accommodation businesses, a significant number of smaller accommodation businesses in the city make no contribution to public finances through business rates (being exempt under the Small Business Bonus Scheme) or VAT (as they trade below the annual turnover threshold of £85,000) and have less to lose if consumers are saddled with a further and uncompetitive tax.
“UKH opposes the introduction of a TVL in Edinburgh, or for that matter anywhere in Scotland, primarily on grounds of price-competitiveness. The UK is one of only three EU countries which do not apply a reduced rate of VAT to accommodation and tourism services (on average, the rate of VAT on accommodation in the EU is around half of that in the UK). Moreover, while it is true that many EU countries do impose some form of tourist or bed tax, this is done against a much lower rate of VAT. To impose an additional tax on visitors to Edinburgh and Scotland is potentially damaging to tourism and fails equitably to compare the competitive position.
“Our visitors are price-sensitive and it is naïve to assume that any additional tax will come without cost or have no effect on visitor behaviour.”
He concluded, “The Scottish Government is in the midst of conducting a national discussion on TVL and has been clear that is has no plans for the introduction of any such tax on consumers (which will be payable by residents of Scotland as well as by visitors to the country). Instead of pushing ahead with its proposals for the introduction and administration of a TVL, the City of Edinburgh Council would do well to await the outcome of the Government’s deliberations on the principle of such a tax which, if to be taken forward, will require clarification of many unanswered questions, primary legislation, and formal consultation which will, hopefully, take more account of the views of an industry which understands its consumers than has the City Council.”