Scottish councils to be given discretionary powers to impose tourism tax

The long-awaited independent review of local taxation in Scotland will recommend introducing a discretionary power for councils to apply a tourism tax, Caterer has learned.

Sir Peter Burt's two-year long inquiry, which reports today, will argue that councils are not benefiting from their investment in local tourism.

The report will support the argument put forward by the City of Edinburgh Council, which said that while the council's investment in their festivals held in August and December/January helped to boost hotel occupancy rates, current tax rules did not allow it to benefit.

This is because, it said, the returns of any increases in the rateable values of visitor-orientated facilities that arise from increased tourism activity are channelled into the national non-domestic rate pool. This is then redistributed across Scotland.

Edinburgh Council proposed a discretionary power for local authorities, intended for use at times when visitor numbers – and council investment in tourism – are at their strongest.

The Burt Inquiry said that while prices quoted for August are often substantially higher than at other times of the year, many of the hotels belong to multinational chains and "it is questionable whether much of the proceeds from these mark-ups is retained within the local economy, or even within Scotland".

Grant Hearn, Travelodge chief executive and operator of 22 hotels in Scotland, described Burt's support for a Scottish tourism tax as "a schoolboy error of the highest order".

"Handing tourism tax powers to local authorities will have severe economic consequences for Scotland's tourism industry.   Burt's logic is flawed and it is he, not the Scottish Executive that fails to understand the corrosive effects of tourism taxes," he said.

"His threat to tax 'multinational chains' is thinly veiled protectionism and, even worse, misses the point.  Travelodge re-invests profits in local jobs, new and upgraded hotels and lower prices for consumers. I will seriously rethink investing further in Scotland if this tax is adopted."

The Lyons Inquiry into local government funding in England and Wales is due to publish its recommendations – likely to include a bed tax proposal - next month.

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Industry says Lyons doesn't understand tourism >>

By Daniel Thomas

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