Introduction of tourism levy in Highlands is far from straight-forward
If death and taxes really are the only certainties in life, then perhaps we shouldn’t be surprised to see more levies potentially heading to the Highlands.
You’re probably aware of Highland Council’s plans to introduce a visitor levy which could see 5% added to overnight accommodation bills.
The local authority is in the middle of a public consultation on its proposals with business and the public having until the end of this month to respond.
What may have escaped your notice is the Scottish Government’s plan to hand local authorities power to charge a tax on visiting cruise liners.
That prospect is still some way off at the moment with the Scottish Government having just launched a consultation.
However, it does open up the possibility of a new levy on the 100-plus cruise ships that dock at Invergordon each year.
The attraction of these charges to a local authority facing financial pressures is obvious.
The local authority estimates the visitor levy could raise £10 million a year, all of which must be ring-fenced for improvements in tourism-related infrastructure and activities.
With so-called ‘tourist taxes’ common in most major tourist destinations across Europe and beyond, it is easy for the council to assume that introducing one in the Highlands would be straightforward.
However, the introduction of a new tax would not be easy.
Many of the accommodation providers in the Highlands who would play a key role in implementing and collecting any visitor levy are small B&Bs and guesthouses.
Many of them operate below the VAT threshold, and increasing prices by five per could force them to either register for VAT, artificially reduce their operating times or close their businesses altogether.
Without the central IT and accounts departments of the big hotel chains, they also face different pressures and greater challenges when it comes to reporting and paying the levy they’ve collected.
There are unanswered questions at this stage about how the scheme will work especially since the council’s plan for spending levy proceeds is confusingly missing from the public consultation.
What is clear is that the Highland Council must work harder to understand the impact on smaller businesses before any decision to implement a visitor levy, or not, is taken.
We are keen to understand more about the particular concerns of small operators which is why the visitor levy is one of the key areas covered in our ongoing Big Small Business Survey.
Previous survey findings showed concerns that revenue raised will go to covering holes in council budgets, instead of being invested in making areas more attractive to tourists.
Directly involving small businesses in the decision-making process about where revenue is allocated is crucial to building their support and easing concerns.
FSB Scotland has been working constructively with the city council in Edinburgh for a number of years, as it develops Scotland’s first visitor levy scheme, to help ensure small business concerns are heard and addressed.
We stand ready to do the same in the Highlands.
Mike Duncan is development manager for the Federation of Small Businesses
