Meeting of the Parliament 28 May 2024
I am grateful to be contributing to today’s stage 3 debate on the Visitor Levy (Scotland) Bill from the Scottish Conservative benches. I echo what was said earlier and thank the clerks of the Local Government, Housing and Planning Committee for all their hard work, and all the external organisations that provided briefings for members.
The Scottish Conservatives back Scotland’s world-leading tourism sector, which is why I have always been open to hearing about how we can best support it. I thank the minister and the majority of members across the chamber for supporting my amendment 46, which will require a visitor levy scheme to specify whether the levy is not payable in relation to accommodation that has an annual turnover below the VAT threshold. I hope that that will make some difference in protecting small and micro businesses.
I fully understand the need to empower local authorities, but that should not come at the expense of businesses. I am of the firm belief that tourists and accommodation providers should not be penalised through the proposed tax. Instead, local councils should be provided with a fair funding settlement that fully supports our tourism sector. When I spoke to 31 out of 32 councils in Scotland about the issue, many of them were, frankly, desperate to generate additional cash. However, other councils will not make a penny from the levy, so we need to find a sustainable long-term solution.
In fact, the levy will negatively impact businesses to the extent that it will undermine long-term revenues and financial sustainability—it will reduce profits and sector growth and will, therefore, reduce tax revenues.
The cost of doing business in Scotland is already high, and many businesses are still reeling from the impact of repeated lockdowns. That is further compounded by business rates, VAT, stringent regulations on short-term lets and so on. As has previously been mentioned, around 2,000 to 3,000 smaller accommodation providers are not VAT registered. Despite my amendment, being pushed over the VAT threshold by the levy will remain a major concern for many people, because the committee heard anecdotal evidence that it can take a 50 per cent increase in turnover just to cover the cost of going over the threshold.
In essence, small businesses, instead of paying VAT because of increased turnover, will be paying VAT for acting as unpaid tax collectors for local councils. That will be a costly and complicated endeavour, particularly for small accommodation providers. Many of those businesses rely on traditional bookkeeping methods that involve the use of ledgers and diaries, rather than sophisticated accounting systems. Implementing and managing the visitor levy will impose a significant administrative burden on those businesses and will divert time and resources away from their core operations. The small accommodation sector runs on tight margins and already faces an endless barrage of regulations. Should the bill be passed, the Parliament runs a real risk of sinking small businesses to fill the gaping black hole in public finances.
I thank members for backing my stage 3 amendment, but I cannot support a bill that will penalise the tourism sector and hurt businesses. I urge members to protect Scotland’s small and micro businesses, which are the backbone of our local economies and communities, by voting against the bill at stage 3.
I will vote against the Visitor Levy (Scotland) Bill at decision time. I have persistently attempted to make the bill as cost neutral to businesses as possible, but I cannot ignore the additional financial and administrative burden that the bill will cause. It remains unclear how it will even be administered. The Scottish Government should not penalise tourists and accommodation businesses through the use of the tax but should instead provide a fair funding settlement to local authorities that fully supports our tourism sector.
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