Highland Council’s tourist tax consultation goes live tomorrow amid cost concerns about charges for residents staying locally and small operators
Questions are mounting as Highland Council agrees to move forward with a consultation on a visitor levy scheme – also known as a tourist tax - which could be worth £10 million a year to the local authority.
At the heart of the issue is how to pay for infrastructure that supports mass tourism, which despite some economic benefits can often burden the public purse.
In response, the Scottish Government passed the Visitor Levy Bill which allows councils to set-up an additional payment for overnight stays, if they choose.
Highland Council yesterday agreed to move to a formal consultation of a five per cent additional charge. The consultation will run from tomorrow morning to February 7 and can be found here.
The issues debated by councillors and advised on by the local authority largely centred on whatever hardships may be incurred by local hospitality operators.
It was also confirmed that this is only the beginning of a process that could also see cruise ship and motorhome levies enacted as well.
One of the key points presented in the report to the council’s economy and infrastructure committee was how smaller businesses would be impacted.
Nationally it is recognised that there are three main areas that would impact on accommodation providers in the Highlands if the levy is introduced.
First, the initial set-up costs required to comply with a visitor levy; second the ongoing administrative and compliance costs; and changes in visitor behaviour.
Operators would be obliged to process the tourist tax on behalf of the council as it would with other charges and they range from £150 to £10,000.
For so-called micro-businesses with turnovers of less than £85,000 the government estimates compliance costs range from £150 to £1100 at most but ongoing costs for two years after implementation range from £200 to £850 per annum.
For a small hotel with 50 employees and a turnover of £1 million to £5 million the total compliance costs range from £3000 to £10,000 while the yearly ongoing costs range from £300 to £400.
The government made clear the visitor levy counts as turnover and that would push some operators into paying VAT - that is a big charge for B&Bs, for example - so they could economically shutter accommodation.
During the debate at the council meeting some of those points were raised by opposition leader Alasdair Christie, who said: “It will be useful to get research on the VAT situation because that will then necessitate some people reducing the number of bed days that are provided in the Highlands in order to remain under the VAT limit.”
That also fed into concerns about council tax paying locals enjoying staycations in the Highlands and having to pay the levy too.
Chairman of the committee, Cllr Ken Gowans said: “Tourism is one of our most important sectors. The introduction of a 5 per cent visitor levy in Highland could generate £10 million each year – money that can be used to sustain, support and develop the services and infrastructure which the sector relies on.
“As well as improving existing infrastructure, it would allow opportunities to look at providing new facilities to help ensure everyone visiting the Highlands to have a high-quality experience.”
Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said: “Highland Council must tread carefully with plans for a visitor levy. If they do this, they must do it right.
“The accumulative regulatory impact could cripple businesses at a time when recovery is precarious.”
