The hospitality industry's fight against a statutory bed tax took a new twist this week, when a leading tourism body proposed a voluntary scheme in Scotland.

The Edinburgh Tourism Action Group (ETAG), which represents 1,000 businesses, said the UK's first voluntary bed tax could raise up to £5m a year to fund tourism-related projects.

A compulsory bed tax imposed by the city council has been rejected by hospitality businesses, which warned it would damage the Scottish capital's ability to compete with other European destinations, such as Dublin and Paris.

But a Deloitte report commissioned by ETAG said voluntary schemes in other cities had proved successful in raising funds to boost tourism, while avoiding the pitfalls of a statutory tax.

Edinburgh's hotels and guesthouses provide about 12,000 beds per night. Deloitte calculated that with, on average, 78% of beds occupied every night, a £1 levy could raise more than £3m and a £2 levy about £5m.

"Voluntary levy schemes typically generate less revenue than compulsory schemes yet are often more attractive, as businesses have the choice to participate and visitors are not forced into making a payment unwillingly," the report says.

Edinburgh council's tourism leader, Donald Anderson, backed the plans. "No one wants to impose a statutory tax," he said. "We don't want to take more money from the taxpayer so we must find a way of getting more money from the visitor."

However, Martin Couchman, deputy chief executive of the British Hospitality Association, sounded a note of caution. "This may just be the best option of a bad bunch and it's not clear whether there is a sufficient number of people supporting a voluntary scheme," he said.

The Lyons Inquiry into local government funding in England and Wales, expected to propose some form of bed tax, is due to publish its findings this month.

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By Daniel Thomas

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