Edinburgh's ‘tourist tax' plan

Edinburgh's proposed bed tax may have been put to sleep but talk of a tourist tax persists, explains licensing solicitor Stephen McGowan

Edinburgh City Council continues to flirt with the idea of some form of "tourist tax". This has come over the last year or so in several guises, including the "transient visitor levy", and the latest of which is the "Business Improvement District". Whatever name you want to give this proposal, it amounts to hotels and other hospitality businesses in Scotland's capital stumping up additional funds for the council's coffers.

The problem is that the council does not have the necessary tax raising powers for a tax as such - that is a matter not for local government but the Scottish Government, and Edinburgh's attempt to get such a power, cap-in-hand to the chaps at Holyrood, was unceremoniously rebuffed.

Hospitality premises already more than wash their face with the amount of rates and licensing fees which are paid to the council. Any additional tax, such as the proposed "bed tax", would have to be passed on to the customer. Industry experts believed this would add as much as £10 to the cost of a room and in turn would affect the city's competition against other UK and European tourist hotspots.

The hotel sector argued, quite rightly, that it was inequitable to single them out as they are not the sole contributors to, or beneficiaries of, tourism in Edinburgh.

It was perhaps with that in mind that Edinburgh went back to the drawing board and have now proposed using the more recognised concept of the Business Improvement District (BID). Edinburgh already has a BID for its city centre, which uses the brand "Essential Edinburgh".

This scheme can work, it is suggested, by requiring financial input from multiple operators including hotels, the airport, other licensed premises such as restaurants, and taxi operators all across the BID area. The argument is that it must be in everyone's interests to keep the tourists coming into Edinburgh, but with the hospitality sector already under tremendous financial pressure from initiatives such as increased licensing fees, it remains to be seen whether additional levies would be counter-productive to the desired goal.
Stephen McGowan is a Scottish licensing solicitor and director of licensing and gambling at Lindsays, Edinburgh