Tourist tax sparks debate in the Highlands amid concerns over economic impact
Highland Council’s proposed visitor levy has sparked a heated debate, with many voicing concerns about its potential economic impact on the region’s tourism industry and economy.
Liz Wassall, proprietor of the family-run Pentland Lodge House, criticised the levy as damaging to both visitors and local businesses.
Responding to comments by Phil Anderson, a financial services professional who supported the idea based on his experience of tourist taxes in Las Vegas, Ms Wassall argued that such comparisons overlook key differences between the two destinations.
“Las Vegas is a city built for entertainment, with a robust tax system in place to support its infrastructure,” Ms Wassall explained.
“Las Vegas is a city in a desert. Its existence is for entertainment. The minimum combined 2024 sales tax rate for Las Vegas, Nevada is 8.38 per cent.
“This is the total of state, county, and city sales tax rates. In addition Las Vegas imposes a separate room tax (also known as the “hotel tax”) on the rental of hotel rooms. This tax rate is 13.38 per cent and applies to accommodations within the Las Vegas Strip and other areas of Clark County.
“The Highlands, by contrast, is a sparsely populated region offering a scenic and culturally rich experience. Most accommodations are small, family-run businesses with seasonal occupancy.
“A 20 per cent VAT rate combined with a proposed 5 per cent tourist levy would make us less competitive than European destinations, where VAT on accommodation ranges from 3 per cent to 13.5 per cent.”
Ms Wassall warned that the levy could deter visitors, particularly those travelling on tight budgets, while increasing operational burdens for small businesses.
She also highlighted the lack of clarity on how the tax revenue would be used, suggesting it might fail to address local infrastructure issues such as road maintenance.
“Visitors who contribute the least economically, such as camper vans and caravans, appear to be exempt, while small businesses will face additional costs to administer the levy,” she added.
Liberal Democrat MP Angus MacDonald echoed these concerns, acknowledging the need for sustainable funding for tourism infrastructure but cautioning against the levy’s unintended consequences.
The MP for Inverness, Skye and West Ross-shire said: “The idea of a visitor levy is sound in principle, but its implementation raises serious concerns.
“Revenue must stay local, benefiting the communities that generate it. For example, almost 90 per cent of respondents in a SkyeConnect survey believe funds raised on the island should directly benefit the island. Yet the current plan would see the money go to a central Highland Council fund, with no guarantee it would return to the source.”
Mr MacDonald also criticised the omission of certain tourist groups from the levy, such as cruise ship passengers, day-trippers, and camper vans, who often strain local services without contributing financially.
“The current proposal risks creating more problems than it solves,” he said.
“Small businesses, particularly in self-catering and B&B sectors, are already struggling with rising costs and red tape. Around 70 per cent of businesses surveyed by SkyeConnect said they lack the resources to handle the additional administrative burden.”
He also highlighted Scotland’s competitive disadvantage due to its 20 per cent VAT rate on tourism services, one of the highest in Europe.
“Adding a visitor levy without addressing this could further undermine the sector’s ability to attract both domestic and international tourists,” he said.
The MP called for greater consultation with local communities and businesses, and for the levy to prioritise fairness and transparency.
“Ultimately, this policy could be a positive step, but only if it ensures that money is reinvested locally, includes all visitor groups, and reduces unnecessary strain on small businesses,” he concluded.
The consultation on the proposed levy remains open, with stakeholders urging Highland Council to carefully consider the full economic and social implications before proceeding.
