Scotland’s first visitor levy – or ‘tourist tax’ – has moved a step closer after City of Edinburgh Council agreed that its upcoming levy should be set at 5% of the daily accommodation cost.
Edinburgh is set to be the first local authority in Scotland to introduce a visitor levy, with the scheme due to go live in 2026.
At a meeting of the council on 22nd August, councillors approved several key tenets of the scheme, including the rate visitors will be charged.
When the scheme goes live, hotel, hostel, bed and breakfast and short-term let visitors will be charged 5% of their daily accommodation/room rate, capped at seven consecutive nights.
That means a visitor paying a room rate of £150 a night would be charged an additional £7.50 a night for the first seven nights of their stay.
City of Edinburgh Council said it expects the levy to raise between £45m and £50m a year by 2028/29.
It has said the revenues will be reinvested into local initiatives, affordable housing and city infrastructure.
Council leader, Cammy Day, said the visitor levy will “significantly increase our ability to invest in the visitor experience and the tourism pressures we face, from keeping the city clean to responding to our housing emergency, so that everyone can continue to enjoy all that the city has to offer”.
However, hospitality trade groups have warned that the levy must be kept ‘to a reasonable minimum’ moving forward.
“The visitor levy will increase costs for both visitors and businesses in Edinburgh, and that cost must be kept to a reasonable minimum,” said Leon Thompson of UKHospitality Scotland.
“It’s concerning that an even higher levy has been proposed than the 5% in the draft scheme.
“I would urge extreme caution against setting the levy at a level which could tip the balance towards this scheme having a detrimental impact to Edinburgh’s reputation as a leading destination.
“Business costs to set up and administer the levy will be significant and it’s positive that the council has so far backed a mechanism for businesses to recover their costs.
“UKHospitality Scotland will consult with members across Edinburgh during the consultation period and respond, reflecting the views of our members.”
Colin Wilkinson of the Scottish Licensed Trade Association said it was “unfair” that accommodation providers will be required to contribute towards initiatives such as housing.
“It’s important to remember that it is not just accommodation providers that benefit from tourism – many other sectors also benefit – but it is the hard-pressed accommodation sector that is being targeted with administering this tax, another cost to business,” he said.
“We are also hearing that some local councillors in other areas are suggesting imposing a visitor levy of up to 12.5%, which is hugely concerning.
“Government ministers can intervene if excessive visitor levies are imposed, but what will exactly trigger that intervention?” asked Wilkinson.
“These levies must be set at a reasonable level at a time when businesses are under inflationary and other pressures, including the ongoing cost-of-living crisis.”
