Trade groups call for tourist tax to be ruled out

TRADE groups have urged finance minister Derek Mackay to rule out a tourist tax once and for all.

Finance minister Derek Mackay will announce the Scottish Budget 2018/19 next week (December 14).

In a joint letter to the minister ahead of the Scottish 2018/19 Budget next week (December 14), the Scottish Licensed Trade Association (SLTA), British Hospitality Association (BHA) and Scottish Tourism Alliance (STA) say the prospect of a visitor levy is of “considerable concern” to the on-trade.

The trade groups have urged Mackay to fully dismiss the “recurrent threat” of any form of tourist tax, bed tax, or transient visitor levy, and to consider ending (or reducing) the Large Business Supplement (LBS), which they say “is acting as a hotel tax” on Scotland’s hospitality venues.

In the letter, the groups say on-trade businesses “are struggling to survive” due to a number of factors, including “the Scottish Government’s punitive Large Business Supplement”; they say the Large Business Supplement’s name is “misleading” as it “represents a tax on many family-owned, local companies”. Currently, the LBS in Scotland is double the rate applicable in England.

However, The Barclay Review of Scotland’s business rates, published earlier this year, called for a reduction to LBS, and the Scottish Government subsequently announced (September 12) that it would aim to reduce LBS by 50% (to 1.3p/£) by 2021.

But the groups’ letter states that, with the majority of businesses awaiting a verdict on their appeals against the 2017 rates revaluation, the reduction in LBS “is more pressing than ever”.

“Scotland’s larger hotels (those with a rateable value greater than £51,000) simply cannot afford to wait another year for support from the Scottish Government,” say the groups in the letter.

“In your Budget we ask that you listen to the industry and reduce the Large Business Supplement to the same rate as applies in other parts of the UK.”

Additionally, while the groups welcomed Mackay’s indication that the Scottish Government has no plans to introduce a ‘tourist tax’, they raised concerns regarding “recurring calls” from local Scottish authorities for additional powers to enable new locally imposed taxes; one recent example, as reported in SLTN (December 7), is Edinburgh City Council’s pursuit of additional tax powers from the Scottish Government to implement a so-called ‘bed tax’.

The trade bodies also highlighted that cities and regions in other countries that do impose such taxes pay less VAT than businesses in Scotland.

“Now is the time to support Scotland’s flourishing hospitality sector and an end to the uncompetitively high level of LBS,” says the letter.

“It is also time, once and for all, to quash any prospect of the introduction of any form of tourist tax or levy.”