The Tourism Tax Debate

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The ongoing consultation by the Scottish Government on the issue of a prospective ‘tourism tax” was raised at one of last years Committee meetings. Mike Metcalfe provides some detail to explain why DAVAA members should look to reject a national tourism tax.

The current challenges facing Scotland’s tourism industry are not the same in all its cities and regions. The solutions to those challenges in many cases does include raising additional finance to address problems or to resource opportunities but we do not believe that a national approach is the right answer and a national tourist tax is definitely in our view the wrong answer. 

We should of course be discussing these challenges at a local level and developing the alternative solutions. A better way of addressing those challenges lies in either a voluntary local levy or in funding bid format driven by the private sector for identified priorities and this is best organised in a partnership between private and public sector either at a regional or local level rather than a national tax. Greater collaboration is in our view the key to resourcing local priorities.

Further too, that giving the power and responsibility to councils to raise another tax further complicates their already difficult financial annual challenge. One concern would be to what extent would a ring- fenced hypothecated tax reduce or displace the budgets that individual councils already place in support of tourism? Both Dundee and Angus Councils do a great deal in supporting Tourism and although we understand that resources are stretched and future funding is critical to growing the sector in both of our regions, we do not believe that taxing the tourist is the way forward.

We see very few if any positives to a national tourism tax and the negatives are both real and multiple in number. The risks are high.  The competitiveness in international tourism is a sensitive matter and one that we should not put at risk. International tourists could be deterred from choosing Scotland as a destination and for those who still do, their discretionary spending whilst with us in food, beverage, entertainment, attractions, retail and all associated services could fall. In terms of taxation, Tourism businesses already face increasing taxation in the large increases in business rates and we already pay the highest VAT considerably above other competitor European countries. Add to this that Seasonality outside of the major cities remains a reality and for many business profitability is already under threat. Many tourism businesses cannot afford a further additional burden. Future investment decisions for all Tourism business will be impacted and many SMEs could be tipped over the edge.  

We consider it important that adequate research is conducted into potential unknown consequences that may arise out of a National Tourism tax.  The implications must be fully understood before a decision of such importance and potential consequence is made. 

Finally, on the subject of fairness when the tourism industry supports so many varied businesses from taxis to visitor attractions, restaurants and bars, retail and transport, why a bedroom tax? What about the unregulated sector of Air BnB? 

There are so many negatives in the proposal and few positives.