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LGA backs work on tourist tax

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Councils are poised to take the next step towards the implementation of a tourist tax as part of a drive towards greater fiscal autonomy.

Members of the Local Government Association’s Culture, Tourism and Sport Board this week voted on proposals to commission further research into the move, which would see visitors charged a fee as either a flat rate or percentage of their accommodation bill.

The idea of a discretionary local levy is gaining traction in areas across England, with councillors on Liverpool City Council debating the introduction of a local charge last week, and similar proposals also under discussion in Bath & North East Somerset and Cornwall councils and Cambridge (pictured) and Oxford city councils.

According to the LGA paper, for such a tax to be introduced, primary legislation would be needed, unless the scheme could be introduced through a business improvement district. The BID mechanism would be the shortest route to implementing a levy, the paper said, but it would also be “more convoluted and restrictive”.

The paper noted that the bar to introducing a tourism levy could be seen to be lower than for other types of fiscal devolution.

“However, given the UK’s long history of centralisation and the current lack of government capacity and parliamentary time, progress in this area will require making a very strong case backed up by a range of supporters,” it warned.

“Additionally, tourism and hospitality bodies understandably have concerns about the introduction of anything that could have a negative impact on their business.”

City of Edinburgh Council, which is leading the campaign for the introduction of a discretionary levy north of the border, said this week that a public consultation showed “overwhelming support” for a charge of either 2% or £2 per room per night in the capital, capped at seven nights.

The proposal, which was backed by 85 per cent of respondents, would raise between £11.6m and £14.6m a year, the council said.

Leader Adam McVey (SNP) said the levy was supported not only by residents, but by many in the local tourism industry. “A majority of businesses agree the vibrancy of our industry wouldn’t be threatened by a small levy but would benefit from the additional investment,” he said.

“Interestingly, this includes more than half of accommodation providers, dispelling fears in certain quarters that the industry wouldn’t support a transient visitor levy.”

Alison Evison, president of the Convention of Scottish Local Authorities, said the findings strengthened the case for the introduction of a local tax. “This is hard evidence from a consultation that shows an overwhelming appreciation of the potential benefits of a discretionary tax,” she said.

Intense lobbying by local authorities in Scotland has seen the Scottish Government warming to the prospect of a visitor levy in recent months, with ministers launching a series of discussion events to allow the pros and cons of such a scheme to be debated.

Although there was no commitment to a tourist tax in the Scottish Government’s draft budget in December, local taxation is one of the key battlegrounds in the ongoing budget negotiations, with the Scottish Greens – on whose support the minority government has traditionally depended to pass its budget – strongly in favour of a visitor levy.

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