Calls for caution as plans for Edinburgh 'tourist tax' move forward

3 September, 2024

An extra charge of 5% of a visitor's total cost per night is expected to come in to force for summer 2026.

Edinburgh has moved a step closer to becoming the first Scottish city to introduce an extra charge on hotel stays.

The transient visitor levy, dubbed a ‘tourist tax’, is expected to raise up to £50m a year to fund tourism projects and improvements to the city. However, critics have warned the scheme could be costly to businesses and damage Edinburgh’s reputation as a tourist destination.

Guests staying overnight in the city will be required to pay a flat charge of 5% of the accommodation cost per night, capped at seven consecutive nights. This will apply to hotels, short-term lets, hostels and bed and breakfasts, but exclude campsites.

Councillors have agreed details of the draft scheme, which is expected to launch in time for summer 2026.

Similar levies are used in holiday destinations worldwide including Amsterdam and Barcelona to support local infrastructure in areas that welcome large numbers of tourists. However, the Scottish Licensed Trade Association (SLTA) has warned the Edinburgh levy would amount to a “tax on a tax” on top of the UK’s higher 20% hospitality VAT rate. Colin Wilkinson, managing director at the SLTA said:

“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,”

A 12-week public consultation seeking evidence from residents, visitors and businesses will launch in the coming weeks. This will inform the final scheme, which will be agreed in January 2025. An 18-month implementation period will then give businesses time to prepare.

Thanet District Council in Kent dropped plans for a similar visitor levy scheme earlier this year as councillors said they did not have the power to implement one. Other destinations including Manchester, Liverpool and Bournemouth, Christchurch and Poole have introduced levies by using them to fund local Accommodation Business Improvement Districts (ABID).

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