Scottish Government ignored industry advice to make damaging tourist tax decision, writes UK Hospitality’s Willie Macleod
UK Hospitality (UKH) is extremely disappointed at finance secretary Derek Mackay’s statement in the Scottish Parliament on January 31, 2019, announcing that the Scottish Government is set to legislate to introduce a tourist tax in Scotland… and then consult on the principles of that tax after they have introduced the legislation!
The Scottish Government is taking a huge risk with the country’s visitor economy in allowing local authorities to levy a tourist tax.
Travellers are price-sensitive and the introduction of an initial charge of £2 per room, per night across Scotland will cost the economy between £175 million and £200m per annum according to figures researched for UKH.
This cost could well exceed the revenue raised by the tax when costs of collection are factored in on top of changes in visitor spending patterns.
The cabinet secretary seems to have only taken account of the opinions of a minority and not thought about the economic impact or alternative policy options available.
This short-sighted decision will have an impact on jobs, tax revenues and investment in the hospitality sector.
An additional tax on visitors will make our country less competitive and make our tourism market one of the highest taxed globally – the UK is one of only three EU countries not to apply a reduced rate of VAT on hotel services. The World Economic Forum already ranks the country 135th out of 136 countries in terms of price-competitiveness.
Astonishingly, a tourist tax will also apply to leisure and business trips taken by Scottish residents and not be limited to international visitors.
The Scottish Government has ignored the advice of the country’s tourism and hospitality industry, brushing aside reasoned, evidence-based contributions in what was shown to be a highly polarised and complex debate during the government’s own national conversation which closed less than a week before this damaging decision was taken.
Additionally, the Scottish Government has failed so far to issue the summaries of six round-table discussion sessions as promised, held between November 2018 and January 2019, at which UKH was represented.
There is no indication whatsoever that any analysis has been made of written submissions, which were invited by the government as part of the national conversation.
This amounts to a disgraceful betrayal of trust.
The Scottish Government needs to listen to the hospitality industry in Scotland and take into account the fears they have on the impact of a tourist tax.
The proposed consultation will need to look very closely at how the administration of this tax will work.
The idea that each local authority will have the powers to introduce their own systems, with their own administration, is ludicrous.
We need one unified system for Scotland and we look forward to working with the Scottish Government to make this happen.
UKH looks forward to hearing from the government how the proposed consultation will be taken forward and will continue robustly to represent the interests of its member businesses.
• Willie Macleod is executive director, Scotland at UK Hospitality.